CEO Mike Hodgson said Serabi's operations were "all about quality not quantity, therefore we mine and process almost insignificant volumes of rock relative to industrial mineral, iron ore and bauxite operations such as Brumadinho".

 

He pointed out the Palito tailings facility comprised small ponds, rather than dams, and were not upstream of any nearby population.  

 

Hodgson said new legislation had been introduced following the dam failure at Mariana in the same state in 2015. 

 

"This legislation has, however been a rather ‘one size fits all' approach, and as a result we do have a highly ‘over-engineered' tailings facility and the annual audit of our tailings facilities, undertaken late last year by an accredited Brazilian geotechnical engineering expert, confirmed our tailings management facility to be in good order, and it remains fully licensed and certified," he said.

 

Hodgson said Serabi did expect further tightening of legislation, but said the government's move to ban all upstream tailings dams would not affect "the safety and legality" of the company's tailings facility. 

 

The reasurance came on the back of Serabi's production update for January. 

 

Serabi produced 3,671 ounces of gold during the first month of the year, which was in line with the full-year 2019 production guidance of 40,000-44,000oz.

 

"The step up from the production levels of 2017 and 2018 will be driven by improved efficiencies in both orebodies and the processing of some of the 40,000 tonnes of flotation tails (grading 3 g/t gold) which will supplement the normal ‘run-of-mine' production," Hodgson said.

 

The company is currently treating stockpiled flotation tailings through the independent trommel feed system, or scrubber, commissioned on January 10, and also completed ore sorter testing which has been shipped to Brazil.

 

Hodgson explained the scrubber allowed the already-milled tails to be fed directly to the cyanidation plant, freeing up capacity in the milling section of the plant.

 

Serabi is also to completing geological resource drilling at Coringa, with a geological resource update and preliminary economic assessment study on schedule for publication in March and June, respectively.

 

The company did not say anything further about Monday's Palito mine fatality, where production had been suspended in the area of the accident pending an enquiry outcome.

 

Serabi had cash at the end of January of US$12.8 million.