Cerrado GOLD Announces Q2 Financials, Cashflow and Operating Cost Performance at Its Minera Don Nicolas MINE IN Argentina
August 29, 2024 www.cerradogold.com
CERRADO GOLD ANNOUNCES Q2 FINANCIALS, CASHFLOW AND OPERATING COST
PERFORMANCE AT ITS MINERA DON NICOLAS MINE IN ARGENTINA
• Gold equivalent production of 16,255 GEO for Q2; On track for Full year guidance of
50,000-60,0000 GEO
• Adjusted EBITDA of $14.7 million for Q2
• Operating results for Q2 highlight stable operating performance which is expected for the
remainder of the year
• Recent 43-101 Mineral Resource Update and Preliminary Economic Assessment
Completed for MDN showing an NPV5% of $111MM at $2,100 oz gold price over a 5 year
mine life
TORONTO, ONTARIO – Cerrado Gold Inc. [TSX.V: CERT][OTCQX: CRDOF] (“Cerrado” or the
“Company”) announces its operational and financial results for the second quarter (“Q2/24”) at its
Minera Don Nicolas (“MDN”) gold project in Santa Cruz Province, Argentina and at its Mont Sorcier
Iron Project in Quebec.
Production results for MDN were previously released on July 17, 2024. The Company’s financial
results are reported and available on SEDAR as well as on the Company’s website
(www.cerradogold.com).
Q2/24 Operating Highlights
• Q2/24 production of 16,255 Gold Equivalent Ounces (“GEO”).
• Q2/24 Adjusted EBITDA of $14.7 million
• AISC of $1,233 during Q2; Focus on cost reduction initiatives underway
• Focus remains on delivering cashflow and strengthening the balance sheet with
significant progress made towards debt reduction during the quarter.
Operational results presented for Q2/24 show a marked improvement over the previous quarter as
the full exploitation of the Calandrias Norte high -grade open pit was achieved in addition to the
continued ramp up of the heap leach operations. Production results for June included a modest
decline due to harsh weather conditions wh ere heavy snow impact ed the transportation of high -
grade ore to the mill and reduced mill throughput. The performance of the Heap leach during the
quarter continued to improve despite the harsh weather and bodes well for the ramp -up to full
commercial production. Performance of the crushing circuit at the Calandrias Sur Heap Leach
continues to improve, allowing the placement of more ore on the heap leach pad during the quarter,
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which is key to delivering higher sustained production rates. Additional crushing capacity is being
added via the addition of a secondary mobile crushing unit that has recently been delivered to the
site and is set to doubl e crushing capacity at Calandrias Sur to around 10,000 tpd to support an
increase in production in the lat ter part of the year, doubling capacity to around 4,500 ozs per
month.
The Company has also made significant progress in improving its working capital position during the
quarter, partly due to cashflow generated by higher gold prices and strong production but also from
the remaining proceeds received under the sale of an opt ion on the Monte Do Carmo project in
Brazil, to a subsidiary of Hochschild, which was approved by shareholders on 27 th June 2024.
Further improvement in the balance sheet is expected in the coming quarter due to susta ined
production rates.
Mark Brennan, CEO and Chairman commented, "With production levels stabilized , the outlook for
the remainder of the year appears robust combined with the added expectation of higher gold prices.
This should have a strong impact on our balance sheet. The recent ly completed PEA at MDN,
underscores the value of the MDN operations. We are now positioned to ramp up exploration efforts
to extend the mine life to further enhance th e value of the project . In addition , if the option to
purchase our Monte do Carmo project in Brazil is exercised, it would place Cerrado in a very strong
financial position to resume an aggressive growth orientated strategy. ”
Updated Mineral Resource Estimate and Preliminary Economic Assessment at Minera Don Nicolas
Subsequent to quarter end, on August 6 th, 2024 the Company released results of a NI 43 -101
Preliminary Economic Assessment ("PEA") and an updated Mineral Resource Estimate ("MRE") for
its Minera Don Nicolas mine located in Santa Cruz Province, Argentina. The work was completed by
GeoEstima SpA (Chile). The final report is to be completed and available on SEDAR+ by 20th
September 2024. The results show a robust cash generating operation producing approximately
56,000 GEO per annum over an initial five year mine life.
Key highlights are presented below:
• After Tax NPV5% of US$111 Million at US$2,100/oz Au price
• After Tax NPV5% of US$153 Million at Spot prices1
• Average annual production targeted at approx. 56,000 Gold Equivalent Ounces ("GEO")2
• Life of Mine Average annual EBITDA of US$49 Million and FCF of US$25 Million
• LOM average EBITDA of US$64 Million and FCF of US$29 Million at Spot prices1
• Mine life of 5 years, from April 2024 based on existing Resources
• Average Cash Costs of US$863/oz; Avg AISC US$1,144/oz
• No Material Upfront Capital Expenditures required
• Updated Mineral Resource Estimate contains 490,000ozs of Measured and Indicated
Resources and 121,150 ozs of Inferred Resources with potential upside from continued
drilling & resource expansion
Notes
1. Spot prices; Au: US$2,400/oz and Ag:US$29/oz
2. GEO calculated by multiplying recovered silver ounces by (25/2100)
The PEA is primarily designed to exploit the Calandrias Norte high grade deposit and the Calandrias
Sur low grade, heap leach, deposit. In addition, a modest underground mine based solely on
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currently known resources in the Paloma Trend and the smaller Zorro open pit near Martinetas are
planned to add additional material for the CIL processing plant. The mine design is based on using
standard open pit mining techniques of drill, blast and haul using a fleet of its own and rented mining
equipment mining fleet to reduce capital needs. Mineralized material from Calandrias Norte is
trucked to the CIL plant near the historical Martinetas mining operations , while material from the
Calandrias Sur pit is crushed and placed on the leach pad in close proximity to the mining operations.
The gold loaded carbon from the heap leach operations will be transported to the gold recovery
circuit at the Martinetas site. Once processing of Calandrias Norte and addit ional high -grade
material is completed, the CIL plant is to be placed on Care and Maintenance until mineralized
material from the proposed underground mine becomes available in 2026 , after underground
development has been completed. Once this material is p rocessed the CIL plant will once again be
placed on Care and Maintenance until sufficient new sources of mineralized material have been
upgraded to support ongoing mining operations which are expected from future exploration
activities. Future mineralized material potential from exploration is currently excluded from the PEA
mine plan.
Q2 Financial Performance
Table 1. Q2 2024 Operational and Financial Performance
Key Operating Information Unit 2024 2023 2024 2023
Operating Data
Ore Mined ktonnes 58.36 75.09 143.63 148.15
Waste Mined ktonnes 1,791.44 1,143.56 4,408.97 2,534.92
Total Mined ktonnes 1,849.80 1,218.65 4,552.60 2,683.07
Strip Ratio waste/ore 30.70 15.23 30.70 17.11
Mining rate ktpd 20.33 13.39 25.15 14.82
Ore Milled ktonnes 65.96 92.91 156.04 190.56
Head Grade Au g/t 7.08 4.84 5.10 4.71
Head Grade Ag g/t 12.86 4.95 11.33 5.34
Recovery Au % 91% 83% 90% 88%
Recovery Ag % 54% 56% 55% 65%
Mill Throughput tpd 725 1,021 862 1,053
Gold Ounces Produced oz 15,938 12,336 26,920 26,129
Silver Ounces Produced oz 25,632 9,556 45,319 22,857
Gold Equivalent Ounces Produced oz 16,255 12,453 27,459 26,404
Gold Ounces Sold oz 15,484 10,907 25,603 26,912
Silver Ounces Sold oz 23,509 9,242 42,258 24,591
Gold Equivalent Ounces Sold oz 15,775 10,953 26,106 27,208
Average realized price and Average realized margin
Metal Sales $ 000's 34,741 21,152 55,117 48,651
Cost of Sales $ 000's 23,148 16,745 46,715 37,442
Gross Margin from Mining Operations $ 000's 11,593 4,407 8,402 11,209
Average realized price per gold ounce sold (1) $/oz 2,199 1,919 2,109 1,787
Total cash costs per gold ounce sold (1) $/oz 1,178 1,306 1,520 1,206
Average realized margin per gold ounce sold (1) $/oz 1,021 613 589 580
Total Direct Operating Costs (1) $ 000's 18,367 11,958 38,145 27,122
Royalties and production taxes (1) $ 000's (129) 2,286 762 5,346
Total Cash Costs (1) $ 000's $18,238 $14,244 $38,907 $32,468
Total direct operating costs per gold ounce sold (1) $/oz 1,186 1,096 1,490 1,008
Royalties and production taxes per gold ounce sold (1) $/oz (8) 210 30 199
Total cash costs per gold ounce sold (1) $/oz $1,178 $1,306 $1,520 $1,206
AISC - Minera Don Nicolas (1) $/oz $1,233 $1,318 $1,554 $1,215
(1) This is a non-IFRS performance measure, see non-IFRS Performance Measures
Three Months Ended June 30 Six months ended June
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The Company produced 16,255 GEO during the second quarter ended June 30, 2024, as compared
to 12,453 GEO for the second quarter ended June 30, 2023. Production is higher in the three months
ended June 30, 2024, due to 46% higher gold head grade and 9% higher recovery, offset by 29%
lower throughput.
The Company generated revenue of $34.7 million for the second quarter ended June 30, 2024, from
the sale of 15,484 ounces of gold and 23,509 ounces of silver at an average realized price per gold
ounce sold of $2,199. For the second quarter ended June 30, 2023, the Company generated revenue
of $21.2 million from the sale of 10.907 ounces of gold and 9,242 ounces of silver at an average
realized price per gold ounce sold of $1,919. Revenue and sales of gold for the current period are
higher than the quarter ended June 30, 2023, due to higher ounces sold and higher average realized
gold price.
Cost of sales for the second quarter ended June 30, 2024, were $23.1 million as compared to $16.7
million for the quarter ended June 30, 2023. The Company incurred $6.9 million higher production
costs for the second quarter ended June 30, 2024 due primarily to due to higher labor costs.
All in Sustaining Costs (including royalties) per ounce sold were $ 1,233 per ounce in the second
quarter ended June 30, 2024, as compared to $1,318 per ounce for the second quarter ended June
30, 2023, an $85 per ounce decrease (refer to reconciliation of Non-IFRS performance metrics). The
decrease is a result of higher production rates in the quarter, offset slightly by higher production
costs in 2024 as compared to 2023.
Net income for the second quarter ended June 30, 2024, was $1.0 million as compared to a $0.4
million net loss for the second quarter ended June 30 , 2023. The decrease in net loss is primarily a
result of higher revenues, offset by higher other expenses and income and mining taxes.
The Company incurred general and administrative expenses of $2.5 million for the second quarter
ended June 30, 2024, as compared to $2.3 million of general and administrative expenses incurred
during the second quarter ended June 30, 2023. For the three m onths ended June 30, 2024 there
was an increase in office expense of $0.4 million offset by a decrease in professional fees of $0.3
million.
Other expense of $7.3 million during the second quarter ended June 30, 2024, include d finance
expense of $2.6 million, foreign exchange loss of $5.0 million, loss on fair value remeasurement of
Corporate Financial Highlights Unit 2024 2023 2024 2023
Financial Data
Total revenue $ 000's 34,741 21,152 55,117 48,651
Mine operating expenses $ 000's 23,148 16,745 46,715 37,442
Income (loss) from mining operations $ 000's 11,593 4,407 8,402 11,209
Net income (loss) $ 000's 1,030 (428) (6,248) (7,866)
Adjusted EBITDA (1) $ 000's 14,663 4,818 12,100 13,034
Operating cash flow before movements in working capital (1) $ 000's 8,394 4,445 9,418 17,035
Operating cash flow $ 000's 3,854 9,962 7,874 27,275
Cash and cash equivalents $ 000's 3,360 5,795 3,360 5,795
Working capital (deficiency) $ 000's (62,119) (33,297) (62,119) (33,297)
Capital Expenditures $ 000's 2,187 13,076 6,527 21,239
(1) This is a non-IFRS performance measure, see non-IFRS Performance Measures
Three Months Ended June 30 Six months ended June
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MDN stream obligation of $0.2 million and loss on fair value remeasurement of MDC secured note
and stream obligation of $0.4 million.
Cancellation of Stock Options
The Company and certain directors and employees of the Company have mutually agreed to cancel
certain stock options (the “ Cancelled Options”) exercisable to acquire an aggregate of 7,521,663
common shares of the Company. These Cancelled Options consist of an aggregate of 1,720,000 stock
options that were granted on August 9, 2021 (expiring August 9, 2026) at an exercise price of
CA$1.41, 150,000 stock options that were granted on October 28, 2021 (expiring October 28, 2026)
at an exercise price of CA$1.53, 1,675,000 stock options that were granted on September 19, 2022
(expiring September 19, 2027) at an exercise price of CA$1.10, 583,330 stock options that were
granted on September 26, 2022 (expiring September 26, 2027) at an exercise price of CA$0.72, 8,333
stock options that were granted on November 25, 2022 (expiring November 25, 2027) at an exercise
price of CA$0.72, and 3,385,000 stock options that were granted on August 23, 2023 (expiring
August 23, 2028) at an exercise price of CA$0.75.
No consideration was paid for the surrender of the Cancelled Options. Following this cancellation of
stock options, the Company has a total of 1,190,829 stock options outstanding
Review of Technical Information
The scientific and technical information in this press release has been reviewed and approved by
Sergio Gelcich, P.Geo., Vice President, Exploration for Cerrado Gold Inc., who is a Qualified Person
as defined in National Instrument 43-101.
About Cerrado
Cerrado Gold is a Toronto-based gold production, development, and exploration company focused
on gold projects in South America. The Company is the 100% owner of both the producing Minera
Don Nicolás and Las Calandrias mine in Santa Cruz province, Argentin a, and the highly prospective
Monte Do Carmo development project, located in Tocantins State, Brazil under option to Amarillo
Mineração Do Brasil Ltda., a subsidiary of Hochschild Mining PLC. In Canada, Cerrado Gold is developing
it's 100% owned Mont Sorcier Iron Ore and Vanadium project located outside of Chibougamou,
Quebec.
In Argentina, Cerrado is maximizing asset value at its Minera Don Nicolas operation through
continued operational optimization and is growing production through its operations at the Las
Calandrias Heap Leach project. An extensive campaign of exploration i s ongoing to further unlock
potential resources in our highly prospective land package in the heart of the Deseado Masiff.
In Canada, Cerrado holds a 100% interest in the Mont Sorcier Iron Ore and Vanadium project, which
has the potential to produce a premium iron ore concentrate over a long mine life at low operating
costs and low capital intensity. Furthermore, its high grad e and high purity product facilitates the
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migration of steel producers from blast furnaces to electric arc furnaces , contributing to the
decarbonization of the industry and the achievement of SDG goals.
For more information about Cerrado please visit our website at: www.cerradogold.com.
Mark Brennan
CEO and Chairman
Mike McAllister
Vice President, Investor Relations
Tel: +1-647-805-5662
Disclaimer
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DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.
This press release contains statements that constitute “forward -looking information” (collectively,
“forward-looking statements”) within the meaning of the applicable Canadian securities legislation.
All statements, other than statements of historical fact , are forward -looking statements and are
based on expectations, estimates and projections as at the date of this news release. Any statement
that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future
events or performance (often but not always using phrases such as “expects”, or “does not expect”,
“is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”,
“estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain
actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be
achieved) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements contained in this press release include, without limitation, statements
regarding the business and operations of Cerrado, anticipated continued improvements in operating
results and working capital position, the likelihood of the option to sell the Monte do Carmo project
being exercised and assumptions set out in the PEA .. In making the forward - looking statements
contained in this press release, Cerrado has made certain assumptions. Although Cerrado believes
that the expectations reflected in forward -looking statements are reasonable, it can give no
assurance that the expectations of any forward-looking statements will prove to be correct. Known
and unknown risks, uncertainties, and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such forward-looking statements. Such
factors include, but are not limit ed to general business, economic, competitive, political and social
uncertainties. Accordingly, readers should not place undue reliance on the forward -looking
statements and information contained in this press release. Except as required by law, Cerrado
disclaims any intention and assumes no obligation to update or revise any forward -looking
statements to reflect actual results, whether as a result of new information, future events, changes
in assumptions, changes in factors affecting such forward-looking statements or otherwise.