Serabi Gold (LSE:SRB) - 300% Share Price Surge Underscores Brazil-Focused Growth Strategy

Sep 10, 2025

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Interview with Michael Hodgson, CEO of Serabi Gold PLC

Our previous interview: https://www.cruxinvestor.com/posts/serabi-gold-lsesrb-meet-the-team-marcus-brewster-7879

Recording date: 9th September 2025

Serabi Gold presents a compelling investment opportunity in the specialized Brazilian underground gold mining sector, combining exceptional recent performance with ambitious yet achievable growth targets. The London-listed company has delivered remarkable returns to shareholders, with its share price surging from approximately £0.60 to £2.40 over the past year, representing nearly 300% appreciation as management successfully executes operational improvements in a favorable gold market environment.

The company operates as Brazil's premier underground gold mining specialist, holding a dominant position in a market with only 31 underground mines nationwide. This unique positioning provides significant competitive advantages in a country historically dominated by large-scale open-pit operations, creating natural barriers to entry and limited competition for high-grade underground deposits.

Serabi's current operations center on maximizing output from existing facilities through intelligent technological implementation. The company employs ore sorting technology to enhance feed grades entering its processing plant, which operates at 600-650 tons per day capacity. This optimization strategy enables production of approximately 60,000 ounces annually from existing infrastructure without requiring major capital investment.

The growth strategy focuses on expanding annual production to exceed 100,000 ounces by end-2028, representing a 67% increase from current levels. This ambitious target relies on aggressive resource development across two primary deposits, supported by the most extensive drilling program in the company's recent history. Management plans 30,000-40,000 meters of drilling annually, targeting resource growth from the current 1 million ounces to at least 1.5 million ounces by 2026.

Recent drilling results validate management's optimistic outlook, with positive exploration results at the Coringa deposit driving a 7% single-day share price increase. The deposit presents significant untapped potential with extensive strike length and gap-filling opportunities that management describes as largely undrilled despite years of operation.

Financial transformation represents a key investment attraction. Serabi has transitioned from capital constraints to strong cash flow generation, enabling self-funded growth without dilutive equity raises. The favorable gold price environment, combined with beneficial Brazilian real exchange rate movements, creates powerful economic tailwinds that enhance cash flow generation from Brazilian operations when translated to reporting currency.

Management maintains disciplined capital allocation, balancing growth investment with potential shareholder returns. The company has committed to evaluating capital returns following 2025 financial results, expected in Q1 2026, providing investors with a clear timeline for potential distributions.

The shareholder base has evolved significantly, with successful diversification from primarily retail investors to include smaller London institutions through a secondary offering in April at £1.35 per share. These institutional investors have benefited from subsequent appreciation, improving market credibility and liquidity. Daily trading volumes have increased from 500-1,000 shares to 1 million shares, facilitating better price discovery and institutional access.

Investment risks include Brazilian political and regulatory environment changes, currency exposure, and exploration risk inherent in resource development. However, the company's long operational history provides valuable local expertise, while dual currency exposure can provide natural hedging benefits.

Serabi Gold offers investors exposure to specialized gold production with significant growth optionality, operational excellence, and management committed to disciplined capital allocation in a favorable market environment.

View Serabi Gold's company profile: https://www.cruxinvestor.com/companies/serabi-gold