MIDAS SHARE TIPS: Find a safe haven…with Miner Serabi, who even in these uncertain economic and political times has great prospects

At an uncertain time, gold comes into its own. And these are undoubtedly uncertain times – good for gold investors and gold miners, too.

The Tapajas region in northern Brazil has been recognized as a gold mining area for over 200 years. So when Serabi Gold’s founders were looking for a Brazilian venture, Tapajos seemed like a logical place to start.

They purchased 125,000 acres of land and set to work. That was almost 20 years ago. Access was difficult, power supplies were limited, and obstacles arose at every turn. Eventually the mine went dormant and Mike Hodgson, a British geologist turned mining company doctor, was brought in to turn things around.

On track: Back in 2020, Serabi shares hit £1.05. Today they are only 39p – that’s too cheap

By 2013, the Palita mine was operational, and six years later, Serabi produced 40,000 ounces of gold. Then the pandemic started. Production fell below 35,000 ounces in both 2020 and 2021. Sales were less than 7,000 ounces in the first quarter of this year as Hodgson struggled to find the equipment it needed to mine high-grade ore.

The stock market was relentless. Back in 2020, Serabi’s share price reached £1.05. Today they cost just 39p. It’s too cheap.

Production has rebounded since March, and an update for the three months to June due this week should show a healthy improvement. Palito is unlikely to reach 40,000 ounces in 2022, but Hodgson is determined to get back to that level as soon as possible. Serabi also owns another mine, Coringa, 125 miles south of Polito. Geological and economic evaluations have already been carried out and the mine is expected to double the annual Serabi ounces if it is in full production.

Hodgson is awaiting final approval, but early licenses have been issued. Meanwhile, Serabi transports the ore from Karinga to Polito and processes it there. The process is expected to yield 3,000 ounces of gold this year, rising to more than 6,000 in 2023.

Ultimately, Hodgson and his team aim to build a full processing plant at Caring, but the new plan means the mine could start to pay for itself at least a year earlier than expected – a particular advantage with gold prices around $1,800 (£1,500) an ounce. .

Hodgson has another cat in the bag in Matilda, an area in the Palita complex where early exploration programs indicate large amounts of copper.

Mining giants including Rio Tinto and Anglo American have been prospecting for the red metal in the same area. If Serabi is lucky, some lucrative deals could happen. Even without that kicker, Serabi is expected to make $4m (£3.3m) in profit this year, soaring to $12.6m in 2023.

The Midas Verdict: Serabi has had some tough years, but the company is back on track, profitable and moving in the right direction. At the price of 39 pence, the shares are bought.

Bidding for: PURPOSE Ticker: SRB Contacts: serabigold.com or 020 7246 6830

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