Unaudited interim results for the three-and six-month periods ended 30 June 2026

Serabi reported H1 2026 EBITDA of $44.4 million, up 69% year over year, and profit after tax of $30.1 million, up 59%, as realized gold prices rose to $4,687/oz from $3,093/oz. Revenue increased 60% to $100.1 million, gold production rose 12% to 23,049 oz, and cash grew to $65.7 million from $49.2 million at year-end after repayment of $5.3 million of Santander debt, leaving the company debt free. Higher cash costs of $2,010/oz and AISC of $2,682/oz reflected Coringa ramp-up and one-time G&A charges; the 53,000+ oz production target depends on expanded ore-transport authorization or a full Coringa mining concession, both still pending.

Analysis

SRB's equity sensitivity is increasingly binary: the operating base is now self-funded, but the incremental valuation case depends on Coringa throughput rather than on a further rise in bullion. The fourth mill creates meaningful operating leverage only if transport constraints are removed; absent that, higher fixed-cost absorption and development spending can keep unit costs elevated despite strong realized margins. The decade-long reduced tax rate materially raises the after-tax NPV of Palito and lowers the need for dilutive external capital, a differentiator versus debt-funded junior gold developers.

Near term, the market is likely to reward a regulatory update more than backward-looking earnings. Q2 profitability and cash generation weakened sequentially despite continued high gold prices, signaling that the headline H1 result is partly price-led rather than proof of a sustainably lower cost structure. The key 1-3 month catalyst is formal ANM/FUNAI/INCRA action; a favorable decision enables Q4 utilization and supports 2027 volume growth, while delay beyond the current permit's practical tonnage capacity risks a production gap, cost inflation, and a sharp de-rating. Over 6-18 months, successful brownfield drilling could extend mine life and convert SRB from a high-gold-price cash generator into a reserve-growth story, but only if exploration spend yields mineable, permitted tonnes.

Contrarian view: the balance sheet limits solvency risk, so a licensing delay is not equivalent to an existential event; it may create an attractive entry if the stock sells off materially on timing rather than a permit denial. Conversely, investors should not capitalize H1 margins at the spot gold price: a lower realized gold price combined with elevated AISC would expose the limited scale of the existing asset base.

Key Decisions for Investors

• Maintain or initiate a small long SRB only ahead of the mid-October operational/regulatory update, sized as an event-driven position rather than a core gold holding. Upside is permit-driven Q4 throughput and multiple expansion; exit or cut exposure if the update lacks a definitive path to increased tonnage or concession approval.
• Use a long SRB / short GDXJ pair for investors seeking the idiosyncratic permitting catalyst while reducing gold-beta risk over the next 1-3 months. The pair is attractive only if SRB's relative valuation does not already price full Coringa expansion; confirm EV/2027 cash flow versus comparable Brazilian and West African junior producers before entry.
• Do not treat SAN or PEEL as read-through beneficiaries: their relationships are not material enough to support a trade. Monitor SRB's liquidity and London trading volumes, as small-cap liquidity can amplify both favorable permit-news gaps and downside on regulatory delay.
• Set a downside trigger around sequential cost and cash-flow performance: reassess the long if next-quarter AISC remains above roughly $2,700/oz without a clear throughput ramp, or if realized gold pricing weakens enough to compress the sustaining margin materially. A formal permit denial, rather than a timing delay, falsifies the expansion thesis.