Serabi Gold (TSX: SBI) this morning published its first quarter production results. The year appears to be off to a poor start, with production coming in under guidance due to a multitude of issues, while the company has had to reduce its production guidance for the year due to lower ore mineralization than expected.
Production at the firms Palito operations declined 13% on a year over year basis, with gold production amounting to 7,062 ounces versus the 8,087 ounces produced in the year ago period. Production was also down on a quarter over quarter basis from 7,678 ounces in the fourth quarter.
Production figures were down due to deteriorating gold grades, with the quarter seeing an average gold grade of 5.95 g/t gold, versus the 6.27 g/t gold average seen in the year ago period. Notably, grades did improve from 5.81 g/t gold in the prior quarter. The declining grades were from the Julia Vein, where the firm has now implemented shrinkage stoping. Mining is now said to be occurring selectively within the vein, while the company emphasizes mine development.
The company also blamed production on supply chain issues, related to receiving new equipment for its mining fleet.
As a result of the diluted ore material however, the company has been forced to reduce its annual production guidance. Previously, the company had expected to produced between 36,000 and 39,000 ounces of gold in 2022. That figure has now dropped rather substantially to just 30,000 ounces.
“In the short term we will be focusing on producing profitable ounces and maximising operational cashflow rather than production growth for the rest of the year, and we are therefore revising our production guidance to be in the region of 30,000 ounces for 2022,” CEO Mike Hodgson said on the results.
Elsewhere, the company has indicated that the development of its Coringa project continues to proceed, with underground development of the mining ramp intersecting the three main veins of the Serra zone.
Serabi Gold last traded at $0.86 on the TSX.
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