Cerrado GOLD Reports Second Quarter Earnings, Cashflow and Operating Costs at Its Minera Don Nicolas MINE IN Argentina
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August 26, 2022 www.cerradogold.com
CERRADO GOLD REPORTS SECOND QUARTER EARNINGS, CASHFLOW AND OPERATING COSTS AT
ITS MINERA DON NICOLAS MINE IN ARGENTINA
• Q2 Production of 11,640 Gold Equivalent Ounces
• AISC of $1,409 per ounce of gold
• Q2 adjusted EBITDA of $3.0 million
• 3rd consecutive quarter of “normalized” operations despite continued challenges
• Infill drilling and Feasibility Study Activities continued at Monte Do Carmo
TORONTO, ONTARIO - Cerrado Gold Inc. [TSX.V: CERT][OTCQX:CRDOF] ("Cerrado" or the
"Company”) is pleased to announce its operational and financial results for the second quarter of
2022 (“Q2 2022”). Q2 2022 represents the third quarter of mine operations post completion of
operational restructuring at its Minera Don Nicolas (“MDN”) Mine in Argentin a. The Company’s
financial results are reported and available on SEDAR as well as on the Company’s website
(www.cerradogold.com).
Q2 2022 Financial and Operational Highlights (All numbers reported in US$)
• Production of 11,296 ounces of gold in Q2 2022 (11,640 Gold Equivalent Ounces (“GEO”), in-
line with annual guidance of 45,000 – 55,000 ounces of production
• The average gold head grade of 3.44 g/t represented a decrease over the previous quarter
due to the integration of new mining areas but is expected to improve in the second half of
the year
• AISC of $1,409 per ounce of gold sold due to lower head grades and throughput during the
quarter
Mark Brennan, CEO and Co-Chairman stated: “Despite some challenges associated with the new pits
being mined and the consequences of a difficult inflationary environment in Argentina , w e are
pleased that production rates are consistently within our range of guidance for 2022. As we look to
the remainder of the year, we expect to see grades gradually improving as we fully incorporate new
mining pits into the production plan. In Brazil work continues to upgrade the resources at Monte Do
Carmo and feasibility works are progressing as planned.”
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Second Quarter 2022 Operational and Financial Performance
Minera Don Nicolas
The Company produced 11,296 ounces of gold and 28,721 ounces of silver during the three months
ended June 30, 2022, as compared to 13,007 ounces of gold and 27,107 ounces of silver in the first
quarter of 2022. The 13% decline quarter on quarter was primarily related to decrease in the head
grade achieved at the mill as new pits were opened. As these new pits are further developed, we
expect grades and throughput rates to improve coming into the second half of the year. Gold
production was 18% higher than the corresponding period in 2021, due to improvements in both
head grade and recovery, as the Company produced 9,607 ounces of gold and 22,388 ounces of
silver in the three months ended June 30, 2021.
The average gold head grade of 3.44 grams per tonne (“g/t”) represents a 26% decrease on the 4.68
g/t head grade achieved in the first quarter of 2022 and a 16% increase as compared to the average
head grade of 2. 97 g/t recorded in the second quarter of 2021. The average silver head grade of
9.95 g/t represents a 33% decrease quarter on quarter and a 9% decrease as compared to the
Key Operating Information Unit 2022 2021 2022 2021
Operating Data
Ore Mined ktonnes 91.69 102.26 180.91 177.67
Waste Mined ktonnes 1,129.77 1,323.45 2,008.89 2,591.18
Total Mined ktonnes 1,221.46 1,425.72 2,189.80 2,768.85
Strip Ratio waste/ore 12.32 12.94 11.10 14.58
Mining rate ktpd 13.42 15.67 12.10 15.73
Ore Milled ktonnes 102.88 106.60 201.56 201.18
Head Grade Au g/t 3.44 2.97 4.05 2.79
Head Grade Ag g/t 9.95 10.91 12.35 9.54
Recovery Au % 91% 87% 90% 89%
Recovery Ag % 67% 57% 63% 58%
Mill Throughput tpd 1,131 1,171 1,114 1,143
Gold Ounces Produced oz 11,296 9,607 24,303 17,091
Silver Ounces Produced oz 28,721 22,388 58,423 37,918
Gold Ounces Sold oz 10,981 9,744 25,602 16,328
Silver Ounces Sold oz 27,775 21,881 60,640 35,989
Average realized price and Average realized margin
Metal Sales $ 000's 20,333 17,858 47,717 29,021
Cost of Sales $ 000's 17,702 15,810 35,912 26,941
Gross Margin from Mining Operations $ 000's 2,631 2,048 11,805 2,080
Average realized price per gold ounce sold (1) $/oz 1,795 1,773 1,809 1,719
Total cash costs per gold ounce sold (1) $/oz 1,376 1,429 1,189 1,464
Average realized margin per gold ounce sold (1) $/oz 419 345 620 255
Total Direct Operating Costs (1) $ 000's 12,975 11,873 25,402 20,850
Royalties and production taxes (1) $ 000's 2,131 2,047 5,041 3,048
Total Cash Costs (1) $ 000's $15,106 $13,920 $30,443 $23,898
Total direct operating costs per gold ounce sold (1) $/oz 1,182 1,219 992 1,277
Royalties and production taxes per gold ounce sold (1) $/oz 194 210 197 187
Total cash costs per gold ounce sold (1) $/oz $1,376 $1,429 $1,189 $1,464
AISC - Minera Don Nicolas (1) $/oz $1,409 $1,542 $1,246 $1,624
(1) This is a non-IFRS performance measure, see non-IFRS Performance Measures
Three Months Ended June Six Months Ended June
Corporate Financial Highlights Unit 2022 2021 2022 2021
Financial Data
Total revenue $ 000's 20,333 17,858 47,717 29,021
Mine operating expenses $ 000's 17,702 15,810 35,912 26,941
Income (loss) from mining operations $ 000's 2,631 2,048 11,805 2,080
Net income (loss) $ 000's (1,492) (1,765) 1,860 (7,437)
Adjusted EBITDA (1) $ 000's 2,950 1,752 12,619 796
Operating cash flow before movements in working capital (1) $ 000's 1,084 1,217 7,650 (491)
Operating cash flow $ 000's (2,452) 1,969 6,328 284
Cash and cash equivalents $ 000's 14,347 6,908 14,347 6,908
Working capital surplus (deficiency) $ 000's 983 (2,900) 983 (2,900)
Capital Expenditures $ 000's 2,109 2,083 4,074 4,555
(1) This is a non-IFRS performance measure, see non-IFRS Performance Measures
Three Months Ended June Six Months Ended June
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average silver head grade of 10.91 g/t recorded in the second quarter of 2021. Mill throughput of
102,880 tonnes of ore represents a 4% increase over the first quarter and a 3% decrease in
throughput as compared to the second quarter of 2021.
Monte Do Carmo Project
In Brazil, the Company continues to focus on numerous fronts to support the completion of the
Feasibility Study (“FS”) for the Serra Alta Deposit. Infill drilling conti nued in the quarter and
completed to August 10th includes 19,600 metres of infill drilling, 8,500 metres of exploratory
drilling, and 3,480 metres of sterilization drilling with the use of 7 drill rigs . To date assay results of
77 full infill drill holes at Serra Alta have been received, and results continue to support an upgrade
in the Resource categorization from Inferred to the Measured and Indicated categories. In addition,
four exploratory drill holes to the east of the East Zone of Serra Alta have bee n completed
demonstrating some eastern extension of the resource at Serra Alta. An additional 2,600m of drilling
were included in the infill program to target potential areas to expand the Resources in Serra Alta.
The updated Resource Estimate is expected later this year with the FS targeted for completion by
the end of Q1/2023.
Financial Results
The Company generated revenue of $20.3 million for the three months ended June 30, 2022, from
the sale of 10,981 ounces of gold and 27,775 ounces of silver at an average realized price per gold
ounce sold of $1,795 and price per silver ounce sold of $22.43. This compares with first quarter
revenue of $27.4 million, from the sale of 14,622 ounces of gold and 32,866 ounces of silver at an
average realized price per gold ounce sold of $1,819 and price per silver ounce sold of $24.01. This
represents a 26% decrease as compared to first quarter of 2021 primarily as a result of the 26%
decrease in gold head grade achieved.
For the three months ended June 30, 2021, the Company generated revenue of $1 7.9 million from
the sale of 9,744 ounces of gold and 21,881 ounces of silver. Revenue from sales of gold and silver
for the current period was 14% higher than the three months ended June 30, 2021, due the higher
gold sales and higher realized price in the current period as compared to the three months ended
June 30, 2021.
Cash operating costs per ounce sold was $1,376 per ounce in the three months ended June 30, 2022,
which represents a 31% increase on the $1,049 per ounce achieved in Q1 2022. The primary drivers
of the increase in costs were a higher strip ratio, reduction in head grade, increase in labour rates in
Argentina and an increase in fuel costs as government subsidies were reduced over the period.
However, despite these challenges, with the achieved operational improvements and increasing
production rates over the last twelve months cash operating costs declined by 4% compared to the
second quarter of 2021. The strip ratio of 12.32:1 for the three months ended June 30, 2022, was
higher than the 9.85:1 achieved in the first quarter of 2022. The increase is primarily related to the
opening of the new pits and was 4% lower as compared to the three months ended June 30, 2021.
Adjusted EBITDA was $ 3.0 million in the second quarter of 2022 which is a $6.7 million reduction
quarter on quarter due to the lower production and a slightly lower achieved sales price over the
period. Adjusted EBITDA improved by $1.2 million as compared to the $1.8 million adjusted EBITDA
recorded in the second quarter 2021. Adjusted EBITDA for the six months ended June 30, 2021 also
represented a $11.8 million improvement as compared to the six months ended 2021.
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The Company incurred general and administrative expenses of $1. 8 million for the three months
ended June 30, 2022, a $0.1 million decrease compared to the general and administrative expenses
incurred during the three months ended June 30, 2021. During the three months ended June 30,
2022, general and administrative expenses decreased primarily due to a decrease in consulting and
professional fees of $0.1 million.
Other expenses included a $ 0.6 million increase in finance expense, primarily as a result of the
interest expense on the secured note payable which closed in the first quarter of 2022 offset by an
increase in foreign exchange of $0. 5 million during the three months ended June 30, 2022, as
compared to the three months ended June 30, 2021.
Net loss for the three months ended June 30, 2022, was $ 1.5 million as compared to a Net income
of $3.4 million in the first quarter on 2022 and a $1.8 million net loss for the three months ended
June 30, 2021.
Capital expenditure for the quarter was $2.1m and $4.0m for the six months ended June 30, 2022.
This was primarily related to engineering activities at the Calandrias heap leach project in Argentina.
Basic and diluted loss per share for the three months ended June 30, 2022, was $0.02, compared to
the basic and diluted earnings per share of $0.04 for the first quarter of 2022 and a $0.02 loss for
the three months ended June 30, 2021, differences are driven by underlying production from the
mine as well as a result of higher finance expenses.
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.
Mark Brennan David Ball
CEO and Co Chairman Vice President, Corporate Development
Tel: +1-647-796-0023 Tel: +1-647-796-0068
[email protected] [email protected]
About Cerrado
Cerrado is a Toronto based gold production, development and exploration company focused on gold
projects in the Americas. The Company is the 100% owner of both the producing Minera Don Nicolás
mine in Santa Cruz province, Argentina and the highly prospective development project, Monte Do
Carmo located in Tocantins State, Brazil.
At Minera Don Nicolas, Cerrado is maximising asset value through further operation optimization
and continued production growth. An extensive campaign of exploration is ongoing to further
unlock potential resources in our highly prospective land package.
At Monte Do Carmo , Cerrado is rapidly advancing the Serra Alta deposit through Feasibility and
production. The Serra Alta deposit Indicated Resources of 541 kozs of contained gold and Inferred
Resources of 780 kozs of contained gold. The Preliminary Economic Assessment demonstrates
robust economics as well as the potential to be one of the industry’s lowest cost producers. Cerrado
also holds an extensive and highly prospective 82,542 ha land package at Monte Do Carmo.
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For more information about Cerrado please visit our website at: www.cerradogold.com.
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Forward-looking statements contained in this press release include, without limitation, statements
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contained in this press release, Cerrado Gold has made certain assumptions, including, but not limit ed
to ability to meet production guidance and dates for the completion of the Monte Do Carmo Feasibility
Study. Although Cerrado Gold 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
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and social uncertainties. Accordingly, readers should not place undue reliance on the forward -looking
statements and information contained in t his press release. Except as required by law, Cerrado Gold
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 ass umptions,
changes in factors affecting such forward-looking statements or otherwise.