Operations

Palito Gold Mine

The 100% owned Palito Gold Mine is a newly commissioned, underground mine extracting high-grade gold and copper sulphide ore.  The mine and a number of nearby areas had been previously worked by garimpeiros for a number of years, but became unviable as the near surface, oxide ores became depleted.

Having reached a throughput rate of 150 tpd in 2005, the Palito Gold Mine’s production throughput increased to 340 tpd during 2006 and is planned to increase to up to 550 tpd during 2007.  Serabi expects a small increase over 2006 gold production levels for the 2007 calendar year, with the objective of increasing production further in 2008, dependent on the outcome of the evaluation of the Ruari's Ridge, Chico da Santa and Palito West prospects.top

Geology

A series of northwest-southeast, steeply dipping, quartz-gold-copper veins form the basis of the Palito Main Zone deposit.  The gold mineralisation of the Palito Main Zone is hosted within the upper levels of a large adamellite granite intrusive associated with felsic volcanics (rhyolites and dactites) and felsic breccias.  Mineralisation is contained within vertical to sub-vertical, mesothermal quartz-chalcopyrite-pyrite veins filling brittle extensional fault systems.  Vein widths typically average over one metre in width with grades typically between 15g/t and 30g/t.  Gold grades in excess of this are associated with semi-massive, chalcopyrite-pyrite 'blowouts' within the quartz veins.

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Resources

In January 2006, independent consultants Hellmann and Schofield updated the geological resource estimate for the Palito Main Zone (PMZ) to JORC standards. The resource calculations were based on 200 drillholes completed up to the end of 2005. Total resources increased by 74% versus the previous resource estimate to 825,900 ounces gold equivalent. The strike length of the resource has increased from 900 metres to 1,050 metres and the maximum depth has increased by 100 metres to the 0mRL, which is 200 metres below the bottom of the existing shaft.  

Hellman & Schofield PMZ Mineral Resource Estimate (Jan 2006)

AuEq Cut-off
grade (g/t) 		Classification
 		 Tonnes
(kt)		 Au grade
(g/t)		 Cu grade
(%)		 Au Eq*ounces
(‘000 oz)

0.0

 Indicated 3,857 5.3 0.25 739
Inferred 779 3.2 0.08 87
Total 4,636 4.9 0.22 826

2.0

 Indicated 2,081 9.1 0.39 681
Inferred 187 12.0 0.16 75
Total 2,268 9.3 0.37 756

5.0

 Indicated 1,089 14.4 0.59 562
Inferred 108 18.5 0.16 66
Total 1,197 14.8 0.55 628

*Gold equivalent ounces are based on US$550 per ounce gold and US$2.25 per pound copper.

As a result of the significant amount of infill drilling completed during 2005, there has been a substantial improvement in the quality of the resources with Indicated Resources now comprising 90% of total resource ounces (up from 12% a year ago). The resource remains open along strike and at depth with mineralised veins identified from drilling and surface trenching up to at least 1.6 km strike; other features and workings suggest these structures could extend much further.

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Mining Method

Having originally commenced production from a series of adits in Q1 2006, Serabi completed construction of an access decline ramp and introduced trackless mining to secure the productivity benefits that mechanical mining would create.

Development top in 'on-ore' and Serabi having originally worked with long-hole stoping has switched to a cut and fill method to mine the production stopes.  Serabi will continue to develop its mining operations to minimise the dilutive effect of mechanical mining and thus enhance the mined grades.

Development and production activities are ongoing at any one time over four to five mining levels allowing Serabi to achieve the optimum mix of development and production and maximise the utilisation of equipment.

Processing Method

The plant currently consists of a crushing circuit and stockpiles to feed the milling section. The mill feeds a flotation circuit to produce a gold-copper concentrate that is regularly shipped to a smelter in Europe. Tailings from the flotation circuit report to a traditional CIP circuit which produces gold bullion on site.

Final refinements to the plant have established a mining capacity of 550 tpd, this having been achieved through a series of staged upgrades and expansions over the past two years.  The process method is tried and tested and suited to the operational environment of the mine.  Plant recoveries have been in excess of 91% throughout the life of the operation.