Serabi Gold shares jump on deal with Brazil indigenous groups
Cecilia Jamasmie | July 31, 2023 |

Coringa mining camp. (Image courtesy of Serabi Gold.)

Shares in Serabi Gold (LON: SRB) (TSX: SBI) jumped in London on Monday after the Brazil-focused gold miner said it had inked an agreement with representatives of indigenous communities confirming their support for the long-term development of the Coringa project.


The stock climbed as much as 21% to 27.9p on the news and it was trading more than 13% higher to 26p towards the end of the trading day in.

“Whilst we still have to complete the indigenous studies and the formal consultation process, there is a willingness from all parties for this to be done as quickly as possible,” Chief Executive Mike Hodgson said.

Permitting a mine in Brazil – in particular for waste storage facilities – has become stricter over the past few years, following two major tailings dam collapses at iron ore mines in the country.

Serabi’s local subsidiary was hit in 2017 with a lawsuit from the Federal Prosecutor’s Office, seeking to revoke the operating licence granted by the state environmental agency. The suit was dismissed in April 2018 in a ruling that also denied any right to appeal the decision.

The federal prosecutor insisted in 2020 with new claims, which ended with the judge of the appeal determining that no further licenses or titles should be granted to Serabi in relation to its Coringa project.

The company did not give up, however, and continued advancing an agreement with the representatives of indigenous communities.

“I recognise that the past 18 months have generated some uncertainty regarding Coringa and Serabi’s ability to develop the project and realise its full potential,” CEO Mike Hodgson said in the statement.

“I hope that others share my view that this agreement significantly reduces this uncertainty and provides a strong platform for the company to move forward with confidence,” he added.

The signing communities have agreed not to take actions to suspend the development of the Coringa project in recognition of the long-term direct and indirect local economic benefits. They also agreed that the licences and titles granted to date for the project are valid.

Strategic asset

Coringa, located 200km (125 miles) away from Serabi’s Palito gold mining complex in the country’s north, is expected to double the company’s gold output once at full tilt.

Combined gold production from Palito sits currently at about 40,000 ounces per year. The Coringa project is forecast to yield an average of 38,000 ounces once in production.

The project is located in the Tapajos region, in the state of Para, which is reported to be the world’s third largest alluvial gold field.

Serabi Gold believes that the region is a major, under-explored mineral province as historical data shows that artisanal miners, called “garimpeiros,” have mined about 30 million ounces of gold mostly from alluvial and surface weathered bedrock deposits in the region since the 1970s.