Serabi Gold (LSE:SRB) – The Playbook for Growing to 70,000–100,000oz While Returning Capital

Sarabi Gold Update – February 5th, 2026: A Detailed Summary

Key Concepts:

• Plant Constrained Business: Sarabi Gold’s production historically limited by the capacity of its processing plant.
• Ore Sorting (Allsortter): Utilizing technology to separate valuable ore from waste material, maximizing throughput at the existing plant.
• Resource Inventory: The total estimated amount of gold contained within Sarabi’s deposits, currently targeted for expansion to 1.5-2 million ounces.
• Throughput: The amount of ore processed by the plant, a key driver of gold production.
• Free Cash Flow: The cash generated by Sarabi’s operations after accounting for capital expenditures.
• LTI (Lost Time Injury): A metric used to measure workplace safety incidents resulting in lost workdays.
• INCRA: Brazilian land registry agency, crucial for securing land use agreements for Coringa.

1. 2025 Performance & Financial Highlights

Sarabi Gold achieved a record year in 2025, producing 44,000 ounces of gold, exceeding the previous best of just over 40,000 ounces. The company demonstrated strong cash generation, starting the year with approximately $20 million and ending with $54 million, despite significant investment in a $12 million exploration program. This program is the first of two years of intensive exploration at Pito and Coringa. The company successfully paid off $7 million in debt in January 2026. Recent quarterly production has been consistently strong, with three consecutive 12,000-ounce quarters (Q3 2024, Q1 & Q2 2025), and Q1 2026 is projected to yield 12-13,000 ounces. Profitability has also increased significantly, moving from $6 million in Q3 2024 to approximately $9 million in Q4 2024, and projected to reach $13-14 million in Q1 2026, driven by rising gold prices. The average gold price for 2025 was $3,480, while current prices are over $5,000.

2. Production Growth Strategy: From 60,000 to 80,000+ Ounces

Sarabi’s strategy to increase production hinges on overcoming its current “plant constrained” status. The immediate focus is maximizing throughput at the Palito (PTO) processing plant by utilizing high-grade ore from Kinga, processed through an allsortter, and combined with ore from the PTO mine. This approach aims to reach approximately 60,000 ounces of production. Beyond 60,000 ounces, the plan involves expanding the plant’s milling capacity, specifically at Palito. This expansion is contingent on the success of the ongoing exploration program at Pito and Coringa, with the goal of increasing the total resource inventory from 1 million to 1.5-2 million ounces by the end of 2026. New resource updates for Pito and Coringa are expected in March 2026, aiming for a 1.3 million ounce interim target. The potential restart of the Sao Chico mine is also being considered, now viable due to higher gold prices.

3. Exploration Program & Resource Expansion

A $12 million exploration program was conducted in 2025 at Pito and Coringa, and a similar investment is planned for 2026. The objective is to increase the resource inventory to 1.5-2 million ounces. The exploration focuses on defining and expanding mineralization at Pito and Coringa. The success of this program will justify the plant expansion at Palito, enabling a throughput rate capable of producing 70-80,000 ounces annually. The company is already preparing for plant expansion at Palito, with ball mills from the decommissioned Coringa plant being repurposed for the expansion.

4. Cost Management & Operational Efficiency

Despite inflationary pressures, Sarabi has maintained relatively flat costs. Labor costs, representing 45% of total costs, are controlled through collective bargaining agreements with the national mine workers union, typically resulting in a 7-8% annual increase. Diesel costs are regulated and subsidized by the Brazilian government, providing cost stability. Power, diesel, and labor account for 65% of total costs. The company’s camp-style operations (housing and feeding the workforce) contribute to a significant fixed cost component, allowing for predictable monthly cost management. The primary driver of increased profitability is the rising gold price.

5. Capital Allocation & Shareholder Returns

Sarabi is currently generating substantial cash flow, sufficient to fund all planned exploration, plant expansion, and the restart of Sao Chico without requiring external financing (debt or equity). The company is committed to returning approximately 25% of its free cash flow to shareholders, potentially through dividends or share buybacks. The decision on the specific method of return will be based on shareholder feedback. The company is also evaluating potential M&A opportunities, primarily within Brazil, but remains disciplined in its approach, prioritizing organic growth and efficient capital allocation.

6. Safety Concerns & Mitigation

Despite a strong safety record in 2025 (seven Lost Time Injuries – LTIs), Sarabi experienced two fatalities in early 2026, one at each mine. One incident was attributed to a disregard for safety guidelines, while the other is under investigation by the police and appears suspicious. The company is redoubling its efforts to improve safety, including the mechanization of the Coringa mine, which is expected to reduce risks associated with manual mining.

7. Coringa Permitting & Future Potential

A key catalyst for future growth is securing full permitting for the Coringa mine. Sarabi has adopted a strategy of avoiding a process plant at Coringa, which has eased permitting challenges. Progress is being made with indigenous communities, and the company is nearing an agreement with INCRA (Brazilian land registry) regarding land use. Additionally, discussions are underway with the Ministry of Mines to extend the mining license at Coringa. Full permitting at Coringa is expected in 2026, removing a significant overhang and unlocking further potential for growth.

8. Investor Perspective: Is it Too Late to Invest?

Sarabi’s CEO believes it is not too late to invest, citing the potential for further growth once Coringa’s permitting is finalized. The successful resolution of permitting issues at Coringa is expected to remove lingering doubts and unlock significant value. The company’s organic growth strategy, combined with its strong financial performance, positions it for continued success.

Notable Quotes:

• Mike Ojenir: “We’re generating so much cash at the moment we can fund it all out of cash flow comfortably.”
• Mike Ojenir: “We’ve actually just paid off what little bit of debt we had left, which was about $7 million.”
• Mike Ojenir: “If we’re going to be in the fours [gold price] for most of 2026, we’re going to have a we’re going to have a good old ride.”
• Mike Ojenir: “We don’t want to go down that road [excessive drilling without analysis] and we’re doing just fine.”

This summary provides a detailed overview of the information presented in the YouTube transcript, maintaining the original language and technical precision. It aims to offer actionable insights for potential investors and stakeholders interested in Sarabi Gold’s performance and future prospects.