Serabi Mining

Ex-hedge fund manager David Kingsman is backing bombed-out Brazil gold play Serabi Mining’s £2.4m refinancing.

Greenwood Investments, a vehicle controlled by Kingsman, has taken more than half of London-based Serabi’s £2.1m placing at 1.5p and has provided a further £300,000 facility in loan stock convertible into shares at the same price. The funding will give Greenwood and Kingsman together 29.3% of AIM-quoted Serabi, which is seeking to establish substantial reserves around its Palito mine in Brazil’s Jardim do Ouro (Garden of Gold) region.

The company, floated in 2005 at 30p, saw its shares reach 54.5p the following year, only to watch them collapse to a nearly invisible 0.43p after chairman Graham Roberts and chief executive Michael Hodgson decided to suspend underground mining there in 2008 because of delays in obtaining equipment and a lack of adequate working capital. Now, however, using the findings of a 6,000-hectare helicopter survey over Palito and its surroundings, the Serabi team argues further evaluation of 18 geological anomalies identified by the survey might yield a target of two-to-three ‘Palito look-alikes’ and establish a total reserve equivalent to up to 600,000 oz of gold, within a potential resource equivalent to 1.2m oz of gold.

Kingsman, a London fund manager for ten years and now running a family investment office in Munich, is not the only business figure to back Serabi’s hoped-for return from the grave. In March, Steven Poulton, founder and former boss of Ariana Resources, director of Stellar Diamonds and involved in several other sector plays, bought nearly 4% of Serabi at less than 1p.

The shares have now bounced to 2.03p, where they are a high-risk recovery punt.