Cerrado GOLD Reports Ni 43-101 Preliminary Economic Assessment and Mineral Resource Estimate FOR the Minera Don Nicolas MINE IN Santa CRUZ, Argentina
August 6, 2024 www.cerradogold.com
CERRADO GOLD REPORTS NI 43-101 PRELIMINARY ECONOMIC ASSESSMENT
AND MINERAL RESOURCE ESTIMATE FOR THE MINERA DON NICOLAS MINE IN
SANTA CRUZ, ARGENTINA
• After Tax NPV5% of US$111 Million at US$2,100/oz Au price
o 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
o 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
1. Spot prices; Au: US$2,400/oz and Ag:US$29/oz
2. GEO calculated by multiplying recovered silver ounces by (25/2100)
TORONTO, ONTARIO – CERRADO GOLD ("Cerrado" or the "Company”) is pleased to announce the 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. The final report is to be completed and available on SEDAR+ by 20th September 2024.
Mark Brennan, CEO of Cerrado Gold commented “The results of the PEA support the near-term operational
performance we are targeting for Minera Don Nicolas. These results support our view that MDN is set to enter
a period of stable operations, generating robust cash flows enabling the reduction of debt and enhancing the
overall financial strength of Cerrado. When combined with the expected receipt of US$45MM in total cash
payments for the recent sale of our Brazilian asset over the next two years, Cerrado will be well positioned for
strong future growth. For the next few years , MDN will be focused on growing resources to extend the mine
life and leverage the value of our existing operations . We continue to view MDN as early in its exploration life
and see the potential for a world-class multi-deposit district moving forward.”
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PEA Summary Results
PEA Base Case1
Average Annual Gold Equivalent Production (ounces) 55,869
Mine life (years) - Mine Plan start Date 1 April 2024 5.0
Total Gold Equivalent Production (ounces) 279,345
NPV @ 5% discount rate (millions, after-tax) $ 111
NPV @ 8% discount rate (millions, after-tax) $ 105
Gold Price (US$/oz) 2,100.0
Silver Price (US$/oz) 25.0
Average Annual EBITDA $ 49.2 M
Average Annual FCF $ 25.2 M
Capital Costs
Initial capital expenditure (Initial Capex) $ 0 M
Sustaining capital expenditures $ 9.5 M
Reclamation cost $ 7 M
Salvage Value $ 3.3 M
Operating Costs
Total cash cost (per ounce sold) 2 864
Mine-site all-in-sustaining cost (per ounce sold) 3 1,146
Notes:
1. Sprott Streaming Agreement has been excluded from this analysis
2. Before royalties and after by-product credits
3. Include C1 cash costs, plus royalties plus sustaining capital
Mineral Resource Estimate
The PEA is based on the updated Mineral Resource Estimate (MRE) , prepared in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects, completed by GeoEstima, with an effective
date of April 1st, 2024, as presented below. It should be noted that Mineral Resources, which are not Mineral
Reserves do not have demonstrated economic viability. This update reflects not only those resources assumed
to be mined in the PEA but also other defined resources within the greater MDN property. Estimation of
depleted satellite Mineral Resources was validated by Cerrado’s Q ualified Persons (“Q Ps”), as defined in NI
43-10, keeping estimation parameters from the previous technical report (SRK 2020), and using updated
drilling data bases and constraining pit shells.
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Mineral Resources
The following table shows our estimates of Mineral Resources prepared with an effective date of April 01, 2024
(except as indicated below).
Grade Values Metal Content
Mine Classification Tonnage Au Ag Au Ag
kt g/t g/t k oz k oz
Calandrias Sur ¹
(Open pit)
Measured 5,192.24 0.91 17.07 151.32 2,849.04
Indicated 7,642.16 1.02 14.16 249.40 3,479.94
M+I 12,834.40 0.97 15.34 400.72 6,328.98
Inferred 2,261.42 0.62 3.32 44.99 241.64
Calandrias
Norte ¹
(Open Pit)
Measured 8.12 18.66 25.98 4.87 6.78
Indicated 70.67 14.52 22.79 32.98 51.79
M+I 78.79 14.94 23.12 37.85 58.57
Inferred 10.58 10.69 12.17 3.64 4.14
Zorro ¹
(Open pit)
Measured 69.09 2.15 8.74 4.78 19.42
Indicated 136.50 1.32 7.38 5.80 32.39
M+I 205.59 1.60 7.84 10.58 51.81
Inferred 120.88 0.81 6.38 3.16 24.79
Depleted
Satellites ² ³
(Open Pit)
Measured 29.91 2.04 0.00 1.96 0.00
Indicated 14.99 1.80 0.00 0.87 0.00
M+I 44.90 1.96 0.00 2.83 0.00
Inferred 1,117.03 1.62 1.72 58.14 61.62
Paloma Trend ¹
(Underground)
Measured 128.86 4.73 18.98 19.58 78.62
Indicated 145.96 4.00 15.97 18.78 74.94
M+I 274.82 4.34 17.38 38.36 153.56
Inferred 88.91 3.93 13.15 11.22 37.58
Total
Measured 5,428.22 1.05 16.93 182.52 2,953.87
Indicated 8,010.27 1.20 14.13 307.82 3,639.05
M+I 13,438.50 1.13 15.26 490.34 6,592.92
Inferred 3,598.83 1.05 3.20 121.15 369.77
Stockpiles 4
Measured 0.00 0.00 0.00 0.00 0.00
Indicated 0.00 0.00 0.00 0.00 0.00
M+I 0.00 0.00 0.00 0.00 0.00
Inferred 951.74 0.54 2.05 16.57 62.58
Notes:
¹ Included in economic evaluation
² Not included in economic evaluation
³ Satellites include Armadillo, Baritina, Baritina NE, Cerro Oro, Coyote, Choique, Mara, and Trofeu.
⁴ Include the stocks from: Armadillo, Cerro Oro, Coyote, Choique, and Mara.
Notes to Mineral Resources Table
Mineral Resource estimates were prepared by the May 10, 2014 edition of the Canadian Institute of Mining, Metallurgy and Petroleum (or
CIM) Definition Standards for Mineral Resources and Mineral Reserves (“2014 CIM Definition Standards”) and disclosed in accor dance
with National Instrument 43-101 – Standards of Disclosure for Minerals Project (“NI 43-101”).
The Qualified Persons for the estimation of Mineral Resources are Calandrias Sur, Calandrias Norte, Zorro, Paloma Trend and Stockpiles
- Orlando Rojas, P.Geo, Member AIG, a GeoEstima SpA employee and Armadillo, Baritina, Baritina NE, Cerro Oro, Coyote, Choique,
Mara and Trofeu - Sergio Gelcich, P.Geo, MAusIMM (CP) Geo, Vice President, Exploration, a Cerrado Gold employee.
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Mineral Resources have an effective date as of: (a) April 1st, 2024, for Calandrias Sur, Calandrias Norte, Zorro, Paloma Trend, Armadillo,
Baritina, Baritina NE, Cerro Oro, Coyote, Choique, and Trofeu; (b) August 31st, 2020, for Mara satellite.
Mineral Resources estimated using an average long-term metal price of US$2,100.0/oz of Au and US$25.0/oz of Ag. For Mara satellite,
an average long-term metal price of US$1,550.0/oz of Au is considered, assuming a mining cost of US$2.65/t, plant cost of US$32.0/t,
and selling costs of US$127.0/t.
Recoveries depend on the type of host mineralization and the extraction method being utilized for the minerals. For the carbon-in-leach
(CIL) process, Au recovery is based on historical metallurgical recovery, which is 90% for Au and 61% for silver. For the Heap Leach
process (HL), Au recovery is based on metallurgical test works and depends on the zone. Au recovery is 70% in the Oxide zone, 60% in
the Transitional zone, and 40% in the Primary zone. The silver recovery is 30% in all zones.
Mineral Resources in open pit are reported within pit shell constrain and above a cut-off grade: Calandrias Sur has a variable cut-off - 0.27
g/t Au for the Oxided zone, 0.31 g/t Au for the Transition zone and 0.46 g/t Au for Primary zone; Calandrias Norte - 1.46 g/t Au; Zorro,
Armadillo, Baritina, Baritina NE, Cerro Oro, Coyote, Choique, Mara and Trofeu - 0.3 g/t Au. In Paloma Trend , Mineral Resources are
reported within a cut-off grade of 1.95 g/t for underground mining shapes. A minimum mining width of 1.5m was used for resource shapes.
The estimated costs are: Calandrias Sur - plant cost of US$11.08/t; Calandrias Norte – plant cost of US$78.33/t; Zorro – plant cost varying
from US$ 13.35 for HL process and US$ 68.20 for CIL process; Depleted Satellite – plant cost of US$40.0/t. The selling costs of
US$242.90/t and mining costs of US$3.50/t was assumed for all open pit costs of US$3.50/t was assumed for all open pit were assumed
for all open -pit mining. For underground shapes, the mining costs are US$40.0/t, plant costs are US$65.0/t and s elling costs are
US$242.9/t. The exchange rate considered is ARG 917.25 / 1 USD.
Density was assigned and interpolated based on specific gravity values by domain.
Numbers may not be added due to rounding.
Project Summary
The Minera Don Nicolas operation is a gold mining operation located in the province of Santa Cruz, Argentina.
MDN is located in the prolific Deseado Masiff with exploration rights over 330K Ha. The operations commenced
in 2019 as a n open pit CIL operation with mineralized material produced from deposits in the Paloma and
Martinetas regions which are mostly depleted of ready to mine resources. In 2023 , MDN added a heap leach
operation to process the mineralized material from Calandrias Sur open pit . The PEA is focused on the
development and mining of the high grade Calandrias Norte open pit to be processe d through the existing
1,000 tpd CIL plant until late 2024 and the ongoing operations and expansion of the Calandrias Sur heap leach
operations until at least 2028. In addition, the PEA has envisaged the development of an initial small scale
underground mining operation upon which future underground exploration is expected to extend the mine life;
and the processing of low grade mined material in the Martinetas area from several stockpiles.
Figure 1. Project Location
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Geology
MDN property includes several deposit styles all within the epithermal clan that defines the Deseado Massif
province, including:
• Low sulphidation sheeted and single vein systems: Martinetas
• Intermediate sulphidation veins and vein/breccias: Paloma
• Dome hosted bulk veins/stockworks and breccias: Calandrias North (HG) and Calandrias South (LG)
Figure 2. Location of MDN mineral deposits
Mining
Mining is primarily aimed 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 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 for
proceeding 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 the Calandrias Norte and any additional high-
grade material is completed, the CIL plant is to be placed on Care and Maintenance until mineralized material
from the proposed underground mine become s available in 2026 after underground development has been
completed. Once this material is processed 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 . This potential is currently excluded from the PEA mine
plan.
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Gold Production from Mining Area
Figure 3. Calandrias complex infrastructure and mineral deposits.
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Figure 4. Martinetas complex infrastructure and mineral deposits
Metallurgy and Processing
As outlined in the technical report, the metallurgical test work supports the recovery of gold by CIL process for
the Calandrias Norte deposit and via heap leaching for the Calandrias Sur deposit. Gold recovery rates for
Calandrias Sur var ies by mineralized material type (oxide, transition and primary) from 35-70% with silver
recovery of approximately 30%. Gold recovery of the higher-grade material from Calandrias Norte is targeted
at 90% with silver recoveries of 61%, in line with historical averages.
Infrastructure
All infrastructure is already available on site with the exception of the expansion of the crushing capacity at
Calandrias Sur used to double capacity. As noted, mineralized material from Calandrias Norte will be trucked
and processed via the existing 1,000 tpd milling operations at Martinetas while crushing capacity at Calandrias
Sur is in the processed of being doubled to over 10,000 tpd to support the higher production rates from late
2024 onward. A new mobile 250 tph crusher has recently been delivered to site and is in the process of being
commissioned to commence ramp up in the coming weeks.
Capital Costs
No additional u pfront capital costs are anticipated given the construction of the heap leaching pad and
extraction circuit was completed in 2023 and pre stripping of Calandrias Norte was completed in early 2024.
Remaining capital expenditures are to be funded from cash flow for the expansion of the crushing circuit at
Calandrias Sur including pad expansions (US$7.1 MM) , underground development (US$27.3 MM and
US$6.5MM in additional drilling and studies) which began in 2024. Sustaining capital is estimated at $1.8
million per year. A closure cost of US$7 Million has been estimated beginning in 2030 with major costs in the
first 3 years after closure and ongoing monitoring costs extending for a total period of 10 years after closure.
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Operating Costs
The LOM mine operating costs are estimated at a total of US$4/t of ROM material moved in in the open pit
and US$50/t for the underground, and processing costs depend on the processing method applied and range
from $7.20/t for heap leach material and approximately $65/t when processed via the CIL plant. G&A costs are
estimated at approximately US$3 million per annum . Operating costs have been benchmarked against the
current operating costs and metallurgical performance.
Gold Production Profile and AISC cost profile
The chart below highlights the expected production and cash cost/ AISC profile at MDN as per the PEA.
Production in expected to average 55,869 GEO over the five year mine life with LOM AISC will average
US$1,146 per year. The PEA outlines gold production from April onwards and excludes the production of
10,982 ozs of gold in Q1/24. A total of 15,938 oz of gold were produced in Q2/24.
Figure 5. Production Profile and AISC
Overall Project Economics
The overall project shows potentially robust economic results with an after -tax NPV at a 5% discount rate of
US$111 million at a flat gold price of $2,100/oz and Ag price of US$25/oz. Project economics are based on a
potential 5 year mine life , with immediate positive after-tax cash flow commencing as at 1 April 2024 . Total
cumulative, after-tax free cash flow over the life of mine is estimated at US$122 million (US$25 million per
annum) at a $2,100/oz gold price.
At Spot prices of US$2,400/oz of gold and US$29/oz of silver the project results with an after tax NPV at a 5%
discount rate of US$153 million and average after-tax free cash flow is estimated at US$35 million per annum.
Figure 6. After-Tax Free Cash Flow