Company Information for Serabi Mining Plc

AIM-SRB

www.serabimining.com

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AIM; SRB

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Company Statement

Serabi Mining plc is a gold mining company focused on the Tapajos geological region of Northern Brazil. The Tapajos is a major, under-explored mineral province that extends over an area about the size of Belgium. Artisanal miners (‘garimpeiros’) are thought to have extracted up to 30 million ounces of gold from mostly alluvial and surface weathered bedrock deposits since the early 1970s. The company has production from its 100% owned Palito Gold Mine, the first and only modern mining operation established in the region, with the opportunity to expand resources and production from its existing project portfolio that totals over 273,000 hectares. Serabi was listed on the AIM market of the London Stock Exchange (ticker symbol SRB) in May 2005. The company has a strong balance sheet with no debt, no hedging, an experienced management team and an attractive mix of production and exploration projects.

At Palito, mining is based on a series of steeply dipping, high-grade, gold-copper mineralised veins. The Palito mine achieved commercial production in October 2006 and in 2007 produced 34,000 gold equivalent ounces. For 2008, production is forecast to be at similar levels, but with production improvements expected in the second half of the year, output is expected to increase in 2009 to more than 40,000 gold equivalent ounces. The Company is targeting a number of potential satellite mines. Dependent on exploration outcomes, Serabi anticipates that development of these opportunities could result in production increasing to around 80,000 to 100,000 gold equivalent ounces by 2011.
Serabi’s portfolio of exploration properties includes a number of advanced projects across the Jardim do Ouro (‘Garden of Gold’) district located adjacent to the Palito Gold Mine. The company has further projects elsewhere in the Tapajos region, which are at an earlier stage of assessment. Serabi has access to an extensive exploration database based on work previously undertaken by Rio Tinto plc (‘Rio Tinto’), which covers a significant portion of the Tapajos region.

Current Operations

Palito Gold Mine
Palito is an underground mine, extracting high-grade gold and copper sulphide ore from steeply dipping veins located along the Palito Main Zone (PMZ). The mine and a number of nearby areas had been previously worked by garimpeiros for several years but became technically unviable for them as the near-surface, oxide ores became depleted.

The company is acquiring a new fleet of narrow scoop-trams and jumbo drill-rigs to improve mining selectivity. The drifts, which are developed on ore, extend up to 750 metres from the main decline with sub-levels spaced nine or twelve metres apart.

The Palito Mine has to date been centred on three main vein structures. During 2008, developments to the east and west of these structures will give access to a further five structures in the Chico da Santa area and the Palito West area. The opening up of these new areas gives significant opportunities to develop multiple mine faces. This will assist mining rates and ore grades that can be delivered to the plant providing a variety of options for the optimization of daily mining schedules.

Mined ore is crushed and mined before being passed through a flotation circuit which recovers some 95% of the copper and around 70% of the gold. The copper / gold concentrate produced by flotation is exported and sold to a European refinery. The flotation tanks are then subject to a traditional cyanidation using a carbon in pulp (CiP) plant. This produces doré which is sold to Brazilian gold dealers.

Over the course of 2008, with the introduction of the new mining fleet, Serabi hopes to increase mine output to some 700 tonnes of ore per day. Improvements in the plant are expected to raise throughput to some 600 tonnes per day with the lowest mined grades being stockpiled.

One of the main aims of 2008 is to establish (for the first time) a mineable reserve at Palito, supported by an updated geological resource in and around Palito. The results and the accompanying independent report are expected to be completed in the early part of July 2008.

Exploration
The exploration programme is divided into 3 distinct areas: (i) Palito Mine itself (ii) the near-mine exploration and (iii) the wider regional programmes.

Palito Exploration
The early months of 2007 were geared towards preliminary evaluation of properties adjacent to the main mine deposit at Palito, the Palito Main Zone (“PMZ”). The presence of mineralisation to the north-east of the PMZ had already been established at Chico da Santa and an area to the south-west, known as Palito West. Limited drilling of both these prospects had previously been undertaken, indicating that these prospects had potential to become small satellite mining operations but were thought to be of limited tonnage. There were also sufficient indications of the potential within the environs of Palito, referred to as Jardim do Ouro, to demonstrate that a series of mineralised structures parallel to the PMZ might exist over a much wider area.

Pursuing this and following up on a strong gold-in-soil geochemical anomaly, the exploration team identified an area of weathered mineralisation (gossan) outcropping adjacent to the south-west end of the Palito airstrip. A trenching programme followed over what is referred to as Ruari’s Ridge, which identified the presence of a high-grade mineralised structure extending over 600 metres strike at surface. The discovery of this surface outcropping mineralisation is significant as it demonstrated for the first time the potential for new prospects not previously exploited by the garimpeiros. Follow-up drilling confirmed the existence of three or four sub-parallel zones of gold-copper mineralization, with an inferred strike extension of some 950 meters along strike and 300 metres vertically.

At the same time a drill programme was initiated on the Chico da Santa area, to the north-east of the PMZ. This successfully identified two additional vein structures in the area, bringing the total number of newly discovered mineralised structures to five.

At the start of 2007 a ground-based, Electro-magnetic (“EM”) geophysical survey was undertaken over selected parts of the Palito property. EM operates on the principal of identifying zones of electrical conductivity and in the Palito area the gold occurs mainly as part of sulphide mineralised structures that possess greater conductivity than the surrounding granite host rock. The 2007 survey was a follow-up to an earlier similar programme undertaken in 2005, the results of which could now be correlated with the occurrence of drill identified zones of mineralisation. The method was therefore shown to be an excellent target generator in locating potential gold bearing mineralised structures of the Palito style, though it should be stressed that the presence of sulphides does not necessarily mean the presence of gold in commercially viable concentrations.

Based on the strong correlation of the 2005 survey results, the 2007 EM survey was centred around the Chico da Santa area, and across the southern extension of the PMZ. From the results, it was apparent that around the Chico da Santa area there existed a number of additional, potentially mineralised conductors, leading to a major revision of the geology and drill targets in the area. Further drill programmes were undertaken culminating in the announcement in January 2008 that a further three highly mineralised structures had been discovered between the PMZ and the previously identified Chico da Santa structures. Results from this exploration programme were sufficiently encouraging for the decision to be taken to commence underground development of a cross-cut from the existing PMZ mine workings to intersect these new veins and commence development, enabling further detailed evaluation of these structures from underground. The location of these new veins in such close proximity to the PMZ mine has accelerated the opportunity to introduce these new ore sources into future mine plans. Mine development of the principle vein (Jatoba) is already underway, with good results. Furthermore, this work has reduced the initial cost of developing the wider Chico da Santa area, which Serabi had previously considered would require independent access from the surface.

In light of the initial success at Ruari’s Ridge, attention turned to the nearby Palito West prospect. In considering the future exploitation of Ruari’s Ridge, it was considered that a separate decline access would be required that could also serve the Palito West orebody. As a result, a drill programme was initiated at Palito West, targeting a potential 200 metres along strike and 150 metres depth. Positive results followed and the drill programme was extended. Serabi now considers that the Palito West mineralisation is of sufficient size and quality in its own right that a ramped cross–cut is now planned from the PMZ that will intersect the Palito West ore zone at a depth of approximately 70 metres below surface. This will allow development and mining concurrently of the mine levels both above and below the intersection with the ramp. Again, this would also increase the number of mining faces available, providing the best opportunity to maximise ore grades delivered to the plant. The access ramp to Palito West is currently scheduled for completion in Q4 of 2008, with initial ore development of the Palito West deposit to commence immediately thereafter.

This change in priorities has resulted in further evaluation of the Ruari’s Ridge prospect being deferred. However, an assessment of the near-surface oxide resource at this prospect is being undertaken, and a mine plan for this ore will be completed shortly, with mining anticipated to commence during Q2 of 2008. Further work on the sulphide resource at Ruari’s Ridge will be undertaken during the course of 2008.

The exploration success during 2007 has been driven particularly by the positive results from the ground-based EM surveys, combined with down-hole EM, which applies the same technique using equipment that is placed down existing drill holes. With orebodies such as those at Palito, which are narrow and of fluctuating shape, drilling needs to be particularly well targeted to maximise the value of each hole, especially when drilling the more expensive and time consuming deep holes. The use of down-hole EM assists in this matter.

It is the view of Serabi’s geologists that Palito and the area around it, comprises regular occurrences of near vertical, narrow, high-grade gold-copper vein structures, associated with the sulphides of pyrite and chalcopyrite. It is the presence of these sulphides that has made the application of the EM technique so successful. With this in mind, Serabi intends to realise the full potential of the Palito and Jardim do Ouro mineral district through an expanded exploration and evaluation programme which is now underway.

Near-Mine Exploration
The first steps towards realising the full potential of Jardim do Ouro were taken in January 2008, when a helicopter-borne EM survey was completed over an area of about 6,000 hectares around the existing Palito area (which itself comprises a surveyed area of only 180 hectares). The resolution of the heli-EM survey is at least as good as the ground-based EM work but provides a faster and more cost effective coverage over a large area. It is expected that the results will highlight the presence of several massive sulphide anomalies which will then be prioritised for drilling according to the perceived prospectivity of each target.

Interpretation of the results of the survey is still in hand but has already confirmed five known targets and highlighted the existence of a further four large (PMZ size) targets as well as numerous smaller targets. Of interest currently is the size of the anomalies particularly over some of the known targets. The survey suggests the extent of the mineralisation is greater than previously thought and Serabi is re-evaluating all the data in light of this additional information.

Over the course of 2008 Serabi anticipates undertaking at least 25,000 metres of drilling. Whilst some of this is already planned and underway, a significant portion will be directed towards new targets generated by the heli-EM survey. Of the planned metres the principal focus is on:

• Chico da Santa: to test the on-strike extension of the veins and in particular
to the north;
• Palito West: to test the down-dip extensions of the orebodies;
• Palito South: to test the southerly extension of the PMZ;
• Palito Deeps: initially to investigate the zone of known mineralisation on the
PMZ at depth to a level of 250 metres below surface (current operations
established to 100 metres); and
• Ruari’s Ridge: to delineate the near-surface oxide resource.

The Company’s objective is that by mid-2009, it should (taking the PMZ, Palito West, Chico da Santa and new Palito style deposits highlighted by the heli-EM) be well on its way to identifying sufficient geological resources from which sufficient mineral reserves can be defined in order to embark on a feasibility study for the construction of an 80,000 to 100,000 gold equivalent ounce per year process plant. Construction and commissioning would be anticipated during 2010 with the build-up to full production being undertaken during 2010-2011.

Wider regional programmes in the Tapajos Area
Castanheira
The Castanheira garimpeiro workings are located 150 kilometres south-west of Palito. Drilling was undertaken on a neighbouring tenement to those held by the primary target. Results from this programme have led the Company to downgrade this area in its priorities given the perceived higher potential of other areas. Serabi will continue to evaluate some of the other targets within the tenements and are planning a steam sediment programme in later 2008 to advance the evaluation of this region.

Sucuba
Located 10-kilometres west of Palito, work has focused on the area around existing garimpeiro workings. Serabi has completed a 14-kilometre geochemistry programme, which identified a number of gold and copper anomalies including a central, east-west feature some 800-metres long. A further geochemistry programme indicates a continuation of the central anomaly for a further kilometre. A limited drill programme during 2006 confirmed the presence in hard rock of gold, lead, zinc and silver mineralisation. A further soil sampling programme has subsequently been undertaken over this Grota do Avaio area and has successfully defined the trend of the mineralisation. A shallow drilling programme over this anomaly will be undertaken in quarter two of 2008. A stream sediment sampling programme is also planned over the wider tenement area to isolate other potential targets.

Pizon and Modelo
Much of the additional land portfolio is concentrated around the Pizon and Modelo prospects, situated some 250 kilometres to the north-west of Palito but still located on or adjacent to the Tocatinzinho Structural Trend. This extensive geological feature is considered to be an important controlling influence over gold and other mineral deposition in this part of the Tapajos. The area around Palito is characterised by high-grade, narrow-vein gold deposits, hosted in granite intrusive rocks. However, while both Pizon and Modelo lie along the same trend, the mineralisation is found in volcanic rocks, which are more likely to host large tonnage, low-grade, bulk mineable near-surface deposits.
Over the past twelve months, the Company has carried out stream sediment sampling over the entire Pizon tenement area with the objective of identifying anomalous areas which would be the subject of more detailed future exploration. During the 1990s, Rio Tinto undertook some limited drilling over part of the Pizon prospect, including an intercept of 32 metres at 5.32g/t. To date, Serabi’s mining programme has identified five significant anomalies in the northern and north-western portions of the tenement areas, with results still pending on the southern areas. Some of these anomalies have returned grades in the catchment area in excess of 1g/t. The most promising prospect encompasses an area of approximately 15 kilometres by five kilometres where significant amounts of visible gold have been recovered from panning.
Upon receipt of the pending assay results, it will be possible to prioritise further work, which will compromise geological mapping and soil geochemistry programmes. This will in turn define specific areas for drill testing and it is our objective to identify drill targets before the end of quarter one 2009.
At Modelo, a similar programme of stream sediment sampling will commence in quarter two with the objective of identifying areas for further evaluation by the end of the year.

Igarape Salustiano and Ornifel-Sucuba
These exploration projects are situated directly along the strike of the Palito mine, and are situated within the regional Tocantinzinho structural trend. As a result, management believes these significant areas of unexplored land provide good exploration potential.

Geographical Spread

The Tapajos Gold Region, which encompasses an area of about 100,000 km2 (350 km by 300 km) in southwest Pará State of Brazil, is approximately 1,300 km southwest from the state capital, Belem.

Board of Directors and Key Management

Graham Roberts	Chairman
Michael Hodgson	Chief Executive
Bill Clough	Director of Business Development
Clive Line	Finance Director
Richard Robinson	Non-executive Director
Roger Davey	Non-executive Director

Company Address

2nd Floor
30-32 Ludgate Hill
London, United Kingdom EC4M 7DR


Telephone:	+44 (0) 20 7246 6830
Facsimile:	+44 (0) 20 7246 6831
Email:	contact[at]serabimining.com
Website:	http://www.serabimining.com

Additional Address/Key Contact

Registered Office
66 Lincoln's Inn Fields
London WC2A 3LH

Annual General Meeting

1 June 2007

Year End

31 December

Nominated Brokers

Numis Securities
10 Paternoster Square
London EC4M 7LT

Nominated Advisors