Cerrado GOLD Introduces GOLD Production Growth Strategy and Provides Update from Its 2021 Exploration Program at Its Minera Don Nicolás GOLD Project IN Argentina
February 9, 2022 www.cerradogold.com
CERRADO GOLD INTRODUCES GOLD PRODUCTION GROWTH STRATEGY AND
PROVIDES UPDATE FROM ITS 2021 EXPLORATION PROGRAM AT ITS MINERA DON
NICOLÁS GOLD PROJECT IN ARGENTINA
• Dual Stream Production Strategy to add lower grade stream to existing
high-grade stream and expected to deliver production of approximately
70,000 ounces of gold (“oz Au”) per annum by Q1 2023 and increase gold
production capacity up to 90,000 oz Au by late 2023
o High grade material (cut-off grade of +1.6 grams per tonne gold; “g/t
Au”) to be processed through current CIL plant anticipated to deliver
40,000-50,000 oz Au per annum
o Lower grade material (cut-off grade of +0.3 g/t Au) to be processed via
planned heap leach operations at both Calandrias and Martinetas
expected to add approximately 40,000 oz Au of annual production
capacity
• Underground Potential Paloma Area:
o Deep drilling to commence at the southern edge of the Sulfuro Vein
where a high-grade subvertical shoot has been delineated by historical
drilling approximately 125 metres (“m”) below the current pit. Drilling in
2022 to target an additional 200m of down plunge extension.
• 2021 drilling has outlined numerous lower and high-grade resource targets
to support the growth strategy
o Significant tonnage of lower grade material that was previously treated
as waste identified to be heap leached (cut-off 0.3 g/t Au)
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TORONTO, ONTARIO – CERRADO GOLD ("Cerrado" or the "Company”) (TSX.V:CERT)
(OTCQX:CRDOF) is pleased to provide an update to its development strategy for gold production
growth and to provide the remaining results of its 2021 near mine exploration drill program
(12,578 m) at its Minera Don Nicolás (“MDN”) Project located in Santa Cruz province, Argentina.
Following recent drilling and a thorough review of the current resources and mine plan at MDN,
Cerrado has commenced development plans that should substantially add to the production
profile at its MDN operations through a Dual Stream Production Strategy to more fully exploit
the entire resource potential . The Dual Stream Production Strategy will focus on processing
high-grade material (cut-off 1.6 g/t Au) through the existing CIL plant and the development of
heap leach facilities for processing of lower grade material (cut-off 0.3 g/t Au) that is currently
treated as waste or stockpiled for future use.
Dual Stream Production Strategy
Previously, lower-grade material at Martinetas (e.g., Cerro Oro and Coyote) was either ignored,
treated as waste or sent to a stockpile. Metallurgical test work to date (see press release dated
September 1, 2021 for more details) suggests gold recoveries via heap leach operations can
economically treat much of this material.
As the results of the recent drill program demonstrate, many high-grade areas have a significant
halo and/or internal dilution zone of lower grade material that can now be viewed as ore moving
forward. The high-grade stream will process ore through the existing CIL plant with an
estimated annual production of 40,000 – 50,000 ounces of gold per annum.
In addition, the Company plans to develop two heap leach operations. The first, as outlined in
the press release date d September 1, 2021, will focus on the Las Calandrias and Escondido
deposits at the northern perimeter of the property. Production is expected to average
approximately 25,000 ounces of gold commencing in Q1 2023 with an initial mine life, prior to
additional exploration, of approximately four years. A second heap leach operation is to be
developed in the Mar tinetas mining region to process low er grade material that is either
currently being treated as waste or stored in a lower-grade stockpile. Cerrado believes this
could be in operation by late 2023 adding a further potential of 15,000 - 20,000 ounces of gold
per annum.
Deep Drilling/ Underground Exploration
As part of the plan to process only high-grade material through the CIL plant (cut-off 1.6 g/t Au),
Cerrado’s drill plan for 2022 will include a strong focus on deeper targeting beyond the extent
of current LOM pits. The first area of focus of the deep drilling will be the southern edge of the
Sulfuro Vein (Paloma) where a high grade subvertical shoot has already been delineated with
historic drilling approximately 125 m below the LOM pit. Drilling will target an additional 200m
of down plunge extension.
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The move towards underground mining is in keeping with the transitions undertaken at both
MDN’s neighbouring mines – Yamana’s Cerro Morro operation and Anglo American’s Cerro
Vanguardia mine. Based upon current resources in place, Cerrado’s exploration team believes
it can readily outline potential resources in excess of 100,000 o unces of gold in underground
mineralized material to act as an initial source of feed to the mill.
Current resources and future exploration plans are now being considered with this new
production strategy in mind to best utilize the current and future resources at MDN. Future
resource activity and updates will focus on outlining resources available to both production
streams.
Mark Brennan, CEO & Co -Chairman commented, “We are very excited to introduce this new
development strategy that will maximize both resource and production growth at MDN. It has been
a challenging yet very interesting period sin ce Cerrado acquired the MDN Mine; the first phase was
focused upon ramping up production and cash flows during a very intense COVID operating
environment; which the team has very successfully achieved, and now as the next phase, we have a
road map to develop what we believe will be the true potential for the MDN mine moving forward.”
He continued, “Exploration work to date has identified near mine, high-grade potential targets and
has opened up additional lower-grade targets which can be quickly brought into the mine plan. The
Dual Stream Production Strategy is expected to provide Cerrado with a platform for continued
production growth, operational flexibility and extended mine life at MDN.”
2021 Exploration Drill Results
Diamond drill holes (“DDH”) from MDN’s exploration program were collared at the Baritina and
Araña targets in the Paloma area (14 DDH, totalling 943 m); and at the M11 Mara, Gecko and
Choique targets in the Martinetas area (47 DDH, totalling 4,709 m ), see Figure 1. The focus of
the 2021 near mine program has been to delineate new , high grade, mineralized zones and
increase the confidence of near surface mineralization that have the potential to quickly be
converted into mineable material. All targets are in the proximity of Cerrado’s current mining
operations, La Paloma and Martinetas pits.
Drill Hole Highlights by target area (all composites are reported as true thickness):
Baritina
PA-D21-85
o 8.00 m at 1.67 g/t Au, from 46.30 m
Including 3.60 m at 2.16 g/t Au from 48.00 m
PA-D21-86
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o 14.62 m at 1.45 g/t Au, from 33.25 m
Including 1m at 3.48 g/t Au from 54.60 m
PA-D21-88
o 3.28 m at 2.69 g/t Au, from 46.95 m
Mara/Armadillo
MA-D21-043
o 4.79 m at 1.21 g/t Au, from 58.40 m
Choique
CH-D21-049
o 1.90 m (apparent width) at 7.05 g/t Au, from 44.55 m
Including 1.00 m (apparent width) at 13.29 g/t Au from 44.55 m
CH-D21-054
o 4.60 m at 1.43 g/t Au, from 19.60 m
Gecko
GK-D21-011
o 1.43 m at 2.85 g/t Au, from 52.50 m
Near Mine Drill Program at MDN
The 2021 exploration drill program at the Minera Don Nicolás Project totalled 12,578 m ,
commenced in February 2021, and was completed i n September 2021. Assays were fully
received in November 2021 and all the previously outstanding results are disclosed in this press
release, (Table 1. and Figures 1. through 3.).
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Figure 1. Plan View Reported Drill Results
The first phase of the program focused on targets adjacent to existing operations at La Paloma
and included targets such as Esperanza/Rocio, Baritina, Chulengo and Araña . These areas
ranked as h igh priority targets, and many of them were already included in the resource
inventory, summarized in the August 2020 technical report completed by SRK.
Drilling in the La Paloma area was completed in July. Cerrado expects that the Baritina target
will add future shallow high-grade feed to the mill and lower grade resources for heap leaching.
Follow up at the Arana prospect on the shallow mineralized trends as well as at depth is
warranted based on the results received to date.
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Figure 2. Plan View Paloma Area Reported Drill Results
The diamond drill rig was subsequently mobilized to the Martinetas area where an additional
4,709 m of drilling was completed in September. The Martinetas area encompasses more than
five square kilometres (“ km2”) of argillic altered rocks that reveal a large fertile epithermal
center. Mineralization includes sheeted veins ( e.g., Cerro Oro) and discrete veins (Armadillo)
which occur in several sectors within the large argillic footprint. Cerrado’s strategy at Martinetas
has been to systematically explore targets identified within the argillic envelope focussing on
permissive structural trends and possible continuities from the known and mined centers (e.g.,
Choique Southeast).
Drilling priorities consider ed the proximity of the different targets in relation to the current
operations. Lateral step out s of known mineralized centers including Cerro Oro, Choique,
Armadillo and Mara were identified as areas that contain shallow mineralization amenable to
open pit mining and thus could be quickly converted into minable resources.
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Figure 3. Plan View Martinetas Area Reported Drill Results
Detailed geological descriptions of each target are provided in the following link:
(https://www.cerradogold.com/geology)
Summary and follow-up
The 2021 program successfully delineated and increased the confidence on near mine shallow
targets both in the La Paloma and Martinetas area. Notably in Paloma, the high grade Chulengo
and Baritina refined geological models were integrated into the mine plans. The mine team will
complete their pre-mining Reverse Circulation (“RC”) infill drilling to optimize sequencing. In a
similar fashion, positive results in Choique that extended the mineralized trend for
approximately 100 m to the southeast will be followed up by tightly spaced RC drilling by the
mine geology team. As part of the new strategy outlined above , the economics of these
deposits, specially those in the Martinetas area, is being evaluated by considering synchronous
mining, feeding the two possible processing circuits (CIL and Heap Leach).
In other targets such as Araña where continuity was limited within the drilled area , follow up
with proper modelling on the shallow mineralised structures and possible deep drilling is
warranted. Negative results in shallow areas believed to have been systematically drilled (e.g.,
M11 and Gecko) will not be part of the next exploration phases.
Table 1. Paloma Area Relevant Intercepts
Baritina
DDH From To Length
(m)
True
Width (m)
Au (g/t)
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PA-D21-85 0.00 4.65 4.65 2.99 1.35
Including 1.00 2.00 1.00 0.64 2.26
22.80 28.80 6.00 3.86 0.54
36.80 42.50 5.70 3.66 1.10
46.30 58.75 12.45 8.00 1.67
Including 48.00 53.60 5.60 3.60 2.16
and 56.80 58.30 1.50 0.96 2.70
PA-D21-86 4.20 7.20 3.00 1.93 0.66
17.40 30.50 13.10 8.42 0.48
33.25 56.00 22.75 14.62 1.45
Including 54.60 56.00 1.40 0.90 3.48
PA-D21-87 5.20 7.50 2.30 1.48 0.65
9.25 19.60 10.35 6.65 0.82
Including 11.25 12.25 1.00 0.64 1.49
and 17.80 19.60 1.80 1.16 1.40
22.60 24.90 2.30 1.48 0.66
38.85 53.30 14.45 9.29 1.25
Including 41.00 44.00 3.00 1.93 1.42
and 46.40 50.00 3.60 2.31 2.12
and 51.50 53.30 1.80 1.16 2.32
PA-D21-88 3.00 5.00 2.00 1.29 1.60
15.10 18.85 3.75 2.41 0.54
21.45 28.15 6.70 4.31 0.30
29.25 30.10 0.85 0.55 1.39
PA-D21-89 23.70 28.40 4.70 3.02 0.65
Including 27.70 28.40 0.70 0.45 1.17
30.50 43.80 13.30 8.55 1.03
Including 41.00 41.50 0.50 0.32 2.75
44.90 46.20 1.30 0.84 1.91
Including 44.90 45.40 0.50 0.32 3.66
46.95 52.05 5.10 3.28 2.69
Including 46.95 48.40 1.45 0.93 4.07
and 50.00 52.05 2.05 1.32 3.59
53.50 68.00 14.50 9.32 1.10
Including 56.70 57.40 0.70 0.45 2.50
PA-D21-90 13.40 15.70 2.30 1.48 1.86
Including 13.45 14.45 1.00 0.64 3.47
19.80 20.80 1.00 0.64 2.37
25.35 32.00 6.65 4.27 0.70
35.00 51.75 16.75 10.77 1.35
Including 39.40 40.50 1.10 0.71 2.38
and 42.90 45.00 2.10 1.35 2.31
and 50.10 51.75 1.65 1.06 2.79
52.60 53.20 0.60 0.39 0.90
PA-D21-91 29.50 54.60 25.10 16.13 0.86
Including 41.50 45.80 4.30 2.76 1.19
and 46.90 50.00 3.10 1.99 2.47