Audited Results for the year ended 31 December 2015

Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development company, today releases its audited results for the year ended 31 December 2015.

(1) The Sao Chico Mine was only declared to be in Commercial Production with effect from 1 January 2016 and therefore all costs and revenues relating to this mine have been capitalised. The Income Statements therefore only reflect the revenues and costs arising from the gold produced from the Palito Mine and the Cash Costs and AISC therefore also only reflect the activities from the Palito Mine.

Financial Highlights

• The Company has declared commercial production at Sao Chico effective from 1 January 2016.

  
  

• All-In Sustaining Costs ("AISC") of US$892 for the year to date with cash costs of US$677.

  
  

• AISC of US$907 for the fourth quarter of 2015 with cash costs of US$610.

  
  

• Gross profit from operations of US$5.66 million compared with a profit of US$0.3 million for 2014

• Operating profit before finance costs of US$0.88 million compared with a loss ofUS$1.33 million for 2014.

  
  

• Cash holdings of US$2.2 million at 31 December 2015.

  
  

• Average gold price of US$1,105 received on gold sales in the fourth quarter of 2015 and US$1,151for the year.

  
  

• Group has secured an additional US$5 million working capital facility.

  
  

• At 31 December 2015, the Brazilian Real to US Dollar exchange rate had weakened by approximately 47% compared against 31 December 2014.

  
  

• Annual inflation in Brazil for January 2016 was 10.48% the highest rate since November 2003. The local Central Bank overnight (SELIC) interest rate was set at 14.25% in January 2016.

  
  

  2016 Guidance

  
  

• Forecast gold production for 2016 of approximately 37,000 ounces with All-In Sustaining Cost between US$840 to US$870 per ounce.

  
  

  Post Year End Highlights

  
  

• Approximately 6.500(1) ounces of gold produced during the first two months of 2016.

  
  

• Testing of third ball mill underway.

  
  

• Other plant expansion programmes proceeding on schedule.

  
  

• Increased plant processing capacity expected to be operational from 1 May 2016.

  
  

  Operational Highlights

  
  

• The final quarter of 2015 recorded 7,925(1) ounces of gold production, giving a year-end total of 32,629(1) ounces.

  
  

• Combined mill throughput for the fourth quarter, for both Palito and Sao Chico ore, totalled 34,848 tonnes, with 130,299 tonnes being milled for the year.

  
  

• A total of 9,598 metres of horizontal development across both mining operation was achieved for the year.

  
  

• At the end of the fourth quarter, surface stockpiles at Palito and Sao Chico totalled approximately16,000 tonnes at a grade of 4.7 g/t of gold.

  
  

• November saw the commissioning of the Gekko intensive leach reactor ("ILR"), which works in tandem with the Falcon gravity centrifugal concentrator. This equipment is working exclusively on the Sao Chico feed to recover gravity gold.

  
  

• Installation of the third ball mill is well underway and this along with improvements in the flotation and CIP process circuits are on schedule to be completed early in the second quarter of 2016. A carbon regeneration kiln is also being acquired which will assist in enhancing gold recoveries once the kiln is operational in the second half of the year.

  
  

  (1) Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate and gold dore that is delivered to the refineries.

  
  

  Palito development

• Annual mine development was 6,928 metres of which 1,960 metres was completed in the fourth quarter of 2015.

  
  

• Annual mine production was 111,751 tonnes at 10.05 g/t of which 26,953 tonnes at 8.84 g/t grammes per tonne ("g/t") was produced in the fourth quarter of 2015.

  
  

  Sao Chico development

• Annual mine development was 2,997 metres of which 729 metres was completed in the fourth quarter of 2015.

  
  

• Annual mine production was 22,096 tonnes at 8.45 g/t of which 7,006 tonnes at 9.76 g/t was produced in the fourth quarter of 2015.

  
  

• Sao Chico is now being developed on the 186mRL and 156mRL levels, with production on the 199mRL and 186mRL levels. The ramp is now being deepened to the 126mRL, the next planned development level, and will continue this year to the 96mRL to accommodate underground drilling of the Sao Chico deposit extension at depth.

Mike Hodgson, CEO of Serabi commented,

"For what has been our first full year of gold production from Palito, 2015 has been a year that I can look back on with great satisfaction at what has been achieved. The operational results have been excellent and the financial results show that we have achieved these in a cost effective manner.

"Gold production in 2015 increased from 18,000 ounces in 2014 to almost 33,000 ounces in 2015 and we are forecasting further production growth for 2016 with Sao Chico now in commercial production. We have a current target of 37,000 ounces of gold production for this year and with three consecutive months of over 3,000 ounces of gold production per month and approximately 6,500 ounces produced during first two months of 2016 we are on target to achieve our best quarter. What is even more satisfying is that these production levels have been achieved before the plant capacity improvements that we expect to complete for the beginning of May 2016.

"The financial results for 2015 speak for themselves; we have reduced cash costs and all in sustaining costs per ounce, have achieved a gross profit margin of 16% for 2015 and are aiming to have an all in sustaining costs of between US$840 to US$870 for 2016.

"I am very optimistic for the next twelve months. We have had some welcome respite in the recovery of the gold price during the first quarter and this provides a boost to our cash generation. Whilst we remain focussed on optimising the current operations, should the improvement in gold prices continue and therefore provide additional cash flow, we will be looking later in the year to evaluate some of our mine site discoveries that lie within the existing tenements. The potential for resource growth at Palito and Sao Chico is excellent with the advantage that this resource growth can quickly be translated into low cost production growth.

"I would like to take this opportunity to thank the team for all their hard work throughout the period. I believe that 2016 will be a good year for Serabi and I look forward to updating shareholders of our continued progress through the year."

The latest interview with Mike Hodgson, discussing the highlights of the 2015 financial year and progress at Palito and Sao Chico can be accessed using the following links:

http://brrmedia.co.uk/event/141647?popup=true

Chairman's Statement

Serabi has enjoyed another very successful year in 2015 and continues to make strides towards its objective of becoming a gold producer with its All in Sustaining Cost ("AISC") in the first quartile. The Palito Mine exceeded our production expectations for 2015 and tonnage and grades have been in excess of the estimates with in original 2012 Preliminary Economic Assessment. I fully expect that this success will continue. Commercial production has also now been declared for the Sao Chico Mine and as a consequence 2016 promises to be another year of production growth.

The year was dominated for Serabi by a falling gold price but as with many emerging market producers the effects were mitigated by the weakness of the local currency. It has been a difficult balancing act in what is our first full calendar year of operations to ensure continuity and consistency of operations whilst at the same time seeking to make cost reductions to optimise margins and safeguard the long term profitability of the business. Management acknowledge the need to attain a cost base that gives the Group the best chance of dealing with the possibility of an extended period of low gold prices.

Whilst there has been a rally in the gold price in the early part of 2016, we have in recent years seen similar trends in the first quarter with a subsequent retrenchment over the rest of the year. We are therefore far from complacent and will use this "windfall" as a buffer against the possibility of potential weakening later in the year. The euphoria of the highs of 2011 and 2012 are well behind us and we should be grateful that gold's traditional place as a safe haven has protected it against the quantum of the price declines seen in many other commodities. The pain is however affecting us all and I believe that 2016 will mark a turning point that will see capitulation on the supply side. This follows a lack of any new significant projects in the last two years, few on the horizon and a period where some existing producers need to defer capital and resort to high-grading their operations to maintain their short-term viability.

This supply shortfall should lead to an inevitable adjustment in prices. By doing all we can to establish now a long term viable operation with the lowest costs possible, I anticipate us being well positioned when this correction takes place. Even if it takes longer to manifest itself the Group will be well protected against any further down turn in the market.

Serabi enjoys the benefit of an experienced management team that has been together for several years. The extensive collective operational experience that they have has been a key factor in the ability to bring two mines into production, on budget and within a short time frame. Serabi's management sets it apart from many other junior mining companies and the proven record of efficiently turning projects into cash flow is attracting support for the Group as it seeks further growth opportunities. In recent years it has been difficult for mining companies to justify undertaking exploration when it has generally been a cheaper alternative to simply add additional ounces through a corporate acquisition.

Management have been active in assessing a number of opportunities as it is clearly an excellent time for Serabi to take advantage of the opportunities created by the market weakness. However, it remains difficult to find the blend of project and price that makes an acquisition compelling. Whilst we consider that Serabi needs to grow and make a step change that will be reflected in its valuation, the Board will not allow management to pursue opportunities that will not bring strong long term returns to our existing shareholders. Of course Serabi has the added advantage of being in a highly prospective area and therefore has numerous organic growth opportunities. Whilst it may be difficult to match the resource growth that an acquisition can bring on a cost per ounce basis, success with our own exploration land holdings has the benefit of seeing in-situ resources quickly transformed onto cash flow. Pursing such organic growth creates the opportunity to build around the Palito Mine a significant hub and spoke operation bringing into play a number of small but highly profitable mines with low capital requirements in light of the leverage available from the existing operations. This ability to generate production quickly with a low capital outlay is another factor which separates Serabi from many other junior exploration and development peers.

Whist we are very pleased with the development of Serabi over the last three years the Board is far from complacent. We have each experienced the pitfalls associated with mining and the inherent risks that exist in the sector and know that despite all the best planning we can never mitigate all of these. Management is constantly challenged to ensure that its plans have flexibility and that it is always seeking to mitigate risks, whether geological, mechanical, social, economic or political. Only by doing this can we ensure that we have a robust, profitable and sustainable business.