Cerrado is building undervalued world class assets to drive significant cash flow
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February 3, 2025 www.cerradogold.com
CERRADO GOLD TO ACQUIRE ASCENDANT RESOURCES INC.
Cerrado is building undervalued world class assets to drive significant cash flow
• Attractive opportunity to acquire 80% of the robust Lagoa Salgada VMS Project with a
Post-tax NPV of US$147 million and a 39% IRR in current Feasibility Study.
o Adds substantial precious metals and critical minerals exposure (34% silver &
Gold, 30% Zinc, 15% copper, 14% lead, 7% tin)
o Expected lowest cost quartile production with US$0.59/lb Zinc Equivalent All in
sustaining cost (AISC) for the first 5 years
o EIA Approval expected in Q2 2025 and Optimized Feasibility Study in Q3 2025
o Underexplored asset with extensive exploration potential
• Optimized Feasibility Study due in Q3, construction decision by year end 2025 and initial
production expected in second half of 2027.
• Limited equity dilution required to bring Lagoa Salgada to production
• Construction well supported with low-cost Export Credit Agency Project Financing with
Tier 1 lenders, support from Sprott and potential off takers to move the project into
production.
• Cerrado current Cash position of US$21 million budgeted to end year flat after all capital
expenditures and debt reduction. Projected cash balance does not include payment of
$15M due from asset sale to Hochschild and potential $10M option payment from Anglo
Gold.
• Management to host Conference Call to discuss transaction on February 3, 2025, at 10:00
AM EST
TORONTO, ONTARIO - Cerrado Gold Inc. [TSX.V: CERT][OTCQX: CRDOF] (“Cerrado” or the
“Company”) announces that it has entered into a definitive agreement (the “ Arrangement
Agreement”) with Ascendant Resources Inc. (TSX: ASND) (“Ascendant”) pursuant to which Cerrado
will acquire all of the issued and outstanding shares of Ascendant (each, an “Ascendant Share”) not
already owned by Cerrado by way of a plan of arrangement under the Business Corporations Act
(Ontario) (the “Arrangement”). Upon completion of the Arrangement, Cerrado will indirectly own
an 80% interest in the Lagoa Salgada Project located in Portugal (“Lagoa Salgada”).
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Under the terms of the Arrangement Agreement, Ascendant shareholders would receive one (1)
common share of Cerrado (each a “Cerrado Share”) for every 7.8 common shares of Ascendant (the
“Exchange Ratio”). The Exchange Ratio is approximately equal to the closing prices of the Ascendant
Shares and Cerrado Shares as of close on January 30, 2025 (the “Transaction Price”). Upon closing,
the Arrangement would result in Ascendant shareholders owning approximately 21% of the Cerrado
Shares outstanding upon closing of the Arrangement . Cerrado will issue 27.7 million shares for the
transaction and will have approximately 131.3 million issued and outstanding shares following
completion of the transaction.
Transaction Rationale
Lagoa Salgada is a well advanced, long -life, low cost polymetallic VMS Project, with gold and silver
accounting for approximately 3 4% of NSR , located in the prolific Iberian Pyrite Belt. In 202 3,
Ascendant completed a Feasibility Study (the “FS”) in accordance with National Instrument 43-101
– Standards of Disclosure for Mineral Projects , on Lagoa Salgada, which outlined a project with an
after-tax NPV of US$ 147 million and IRR of 39% generating approximately $75MM per annum in
free cash flow over the first 5 years of operations . A new optimized feasibility study is anticipated
to be completed by late summer.
Lagoa Salgada has been awarded “Project of National Interest ” status from the Government of
Portugal and approval of the recently submitted Environmental Impact Assessment (“E IA”) is
expected in the coming months. Ascendant is currently advancing an optimized feasibility study
expected to further improve the project economics and be in a position to undertake a construction
decision by year end. The optimization study has focused on improved metallurgical results and
reducing up front capital requirements t o support an inversion in the NPV to CAPEX ratio (See the
press release of Ascendant dated December 11, 2024). Ascendant also continues to make significant
progress with construction financing with access to low-cost Export Credit Agency project financing
supported by UK Export Credit Agency and Banco Santander for up to 70% of capital expenditures.
Lagoa Salgada is well known to the Cerrado team and the Arrangement is expected to offer a
number of significant benefits to Cerrado, including:
• Attractive valuation for a robust, well -defined, lowest quartile cost project with
substantial near-term value creation opportunities.
• Adds further precious metals exposure (approx. 34% of Lagoa NSR) and additional
critical minerals ownership to Cerrado.
• Project is expected to generate more than US$75MM per year of Cash Flow once in
operation, based on the existing FS.
• Cerrado is well-funded to co mplete the planned optimized feasibility study as well
as progress exploration at the highly prospective Lagoa Salgada project, unlocking
near term value for all shareholders.
• Construction decision expected in Q4 2025
• With funding requirements of less $5MM to deliver a construction decision, Cerrado
has budgeted to exit 2025 with +$20MM in cash based on current operating and
development budgets and debt redu ction (not including payments due to Cerrado
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from Hochschild of $15M from asset sale and potential $10M option payment from
Anglo Gold).
• Development and construction schedule converges well with timeline of Cerrado’s
existing portfolio at Minera Don Nicolas gold operations and planned development
of the Mont Sorcier iron project.
Recommendations
The Transactions (as defined below) have been unanimously approved by the members of the
respective Boards of Directors of Cerrado and Ascendant eligible to vote thereon. In the case of
Ascendant, the Board of Directors approved each of the Transactions upon receipt of the
recommendation of its lead independent director who served and functioned as the special
committee (the " Special Committee "). In connection with the recommendation, Stifel Nicolaus
Canada Inc. provided a fairness opinion to the Special Committee, stating that, and based upon and
subject to the assumptions, limitations, and qualifications set forth therein, the consideration
offered pursuant to the Arrangement is fair, from a financial point of view, to the Ascendant
shareholders.
Mark Brennan, CEO and Chairman commented, "Cerrado has spent the last nine months improving
its balance sheet and positioning the Company with a strong financial and operating position; it has
budgeted its current US$21M cash position to remain at current levels following completion of all of
its capital expenditure programs (including Lagoa Salgada) as well as further debt reduction
scheduled for 2025.”
He continued, “The acquisition of Lagoa Salgada is a tremendous opportunity for Cerrado to add a
world class, low cost asset with strong cash flow potential and create significant value as well as
support our longer-term development plans without compromising our financial strength and
current operations . The existing value and significant near-term exploration potential at Lagoa
Salgada is well understood by management who see the opportunity to bring the Lagoa project to a
construction decision this year with current funding and banking support . Furthermore, t he
acquisition will provide minimal dilution for all shareholders of the combined company. We are
excited that Lagoa Salgada is expected to be the next producer on the Iberian Pyrite Belt.”
In connection with the Arrangement, Cerrado has entered into a subscription agreement with
Ascendant pursuant to which it will subscribe for Ascendant Shares for gross proceeds of
CA$900,000 in cash at a price of C$0.0525 per Ascendant Share (the "Cerrado Private Placement").
Sprott Private Resources Streaming and Royalty (Collector), LP (“ Sprott”) has agreed to invest the
Canadian dollar equivalent of approximately US$1,660,172 of accrued and deferred interest owing
by Ascendant (the “Deferred Interest”) to it under a secured note (the “Sprott Note”), by satisfying
the payment of the Deferred Interest with the issuance of Ascendant Shares at a price of C$0.0525
per Ascendant Share (the “ Sprott Private Placement ”, and together with the Cerrado Private
Placement, the “ Private Placements ”). The Ascendant Shares to be issued under the Private
Placements will be at a price of $0.0525 per Ascendant Share. Upon completion of the Cerrado
Private Placement, Cerrado would be expected to hold in aggregate approximately 14.5% of the
then issued and outstanding Ascendant Shares (on a non -diluted basis). The Sprott Private
Placement will be completed in two tranches. Upon the completion of the first tranche, Sprott
would be expected to hold in aggregate approximately 19.9% of the then issued and outstanding
Ascendant Shares (on a non -diluted basis). Completion of the second tranche will be subject to
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shareholder approval in accordance with the rules of the Toronto Stock Exchange (the “ TSX”).
Assuming the requisite shareholder approval is obtained, upon completion of the second tranche
Sprott would be expected to hold in aggregate approximately 25.6% of the then issued and
outstanding Ascendant Shares (on a non-diluted basis). The Cerrado Private Placement and the first
tranche of the Sprott Private Placement are expected to be completed within the next two weeks,
subject to satisfying all conditions to closing, including TSX and TSX Venture Exchange (“TSX-V”)
approval. The Arrangement and the Private Placements are together referred to herein as the
“Transactions”.
Additional Transaction Details
The Arrangement
The transaction resulting in the proposed business combination between Cerrado and Ascendant
will be effected by way of a court -approved plan of arrangement under the Business Corporations
Act (Ontario). The Arrangement will require approval by 66⅔% of the votes cast by the shareholders
of Ascendant at a special meeting of Ascendant shareholders (the “Ascendant Special Meeting”) to
be held following receipt of an interim order of the Ontario Superior Court of Justice. Holders
representing in aggregate 14.5% of the issued and outstanding Ascendant Shares as of the date of
the Arrangement Agreement, including each of Ascendant’s directors and officers and Sprott, as
well as other shareholders, have entered into voting support agreements, pursuant to which they
have agreed to vote their common shares he ld in favor of the Arrangement, subject to certain
conditions. In addition, shareholders representing an aggregate of 14.5% of the outstanding
Ascendant Shares have provided written non -binding indications of support for the Arrangement.
Cerrado currently owns approximately 8.8% of the outstanding Ascendant Shares, which it will be
entitled to vote in respect of the Arrangement. Following the closing of the Private Placements (to
the extent described below), the total number of shares held by shareholders that have signed
voting support agreements or provided written non -binding indications of support together with
the Ascendant Shares issued under the Private Placements that are entitled to vote, and Ascendant
Shares held by Cerrado would represent, in aggregate, approximately 53.4% of the then issued and
outstanding Ascendant Shares (on non -diluted basis), all of which are expected to vote for th e
Arrangement at the Ascendant Special Meeting.
In connection with its approval of the Arrangement, the Board of Directors has approved certain
amendments to the terms of the Ascendant Options , pursuant to its omnibus security-based
incentive plan , that will permit the conditional exercise of all outstanding options by holders in
accordance with the terms of such plan (such exercise be conditional upon the consummation of
the Arrangement) and accelerate the expiration date of outstanding options that are “out -of-the-
money” and have not been conditionally exercised prior to the effective date of the Arrangement,
such that any such options will expire as immediately prior to the Arrangement. It is expected that
holders of options that are outstanding at the effective time of the Arrangement will receive
replacement options of Cerrado that will be exercisable for Cerrado shares as adjusted by the
Exchange Ratio. Holders of warrants of Ascendant will automatically be entitled to receive Cerrado
shares, as adjusted by the Exchange Ratio, upon exercise of the warrants of Ascendant in accordance
with the terms and conditions of the certificates evidencing the outstanding Ascendant Warrants.
The Arrangement Agreement includes customary representations, warranties, covenants and
conditions and certain other provisions including non -solicitation provisions and other deal
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protection clauses, subject to the right of Ascendant to accept a superior proposal in certain
circumstances, with Cerrado having a 5-business day right to match any such superior proposal. The
Arrangement Agreement also provides for a termination fee payable to Cerrado in the amount of
$1.2 million if the Arrangement Agreement is terminated in certain specified circumstances, and for
Ascendant to be entitled to a payment of C$400,000 in respect of reimbursement of expenses if the
Arrangement Agreement is terminated in certain specified circumstances. Also in connection with
the Arrangement, Cerrado and Ascendant have agreed to amend the terms of outstanding loans
owed by Ascendant to Cerrado pursuant to certain promissory notes and a shared services
agreement between the parties. As amended, each of the loans will mature on demand by Cerrado
on a date no earlier than the earlier of: (i) the date t hat is 366 days from the date of notice of
repayment and (ii) if applicable, the date upon which a change of control (as defined in such notes)
of Ascendant occurs.
In addition to the required shareholder and court approvals described above, the Arrangement is
subject to the acceptance by the TSX in respect of Ascendant and the TSX -V in respect of Cerrado.
The Private Placements are also subject to acceptance by the TSX and Cerrado’s participation in the
Cerrado Private Placement is subject to the approval of the TSX-V. Each of the Transactions are also
subject to the satisfaction of certain other closing conditions customary in transactions of this
nature.
The Private Placements
The Arrangement Agreement contemplates the completion of the Private Placements prior to the
consummation of the Arrangement. Ascendant expects that the Private Placements will effectively
raise aggregate gross proceeds for Ascendant in the amount of CA$3,292,972, which is expected to
be realized through a combination of cash to Ascendant and the satisfaction of accrued interest
owing by Ascendant, in exchange for the issuance of approximately 62,723,274 Ascendant Shares
to be issued at C$0.0525 per Ascenda nt Share. Each of the definitive agreements related to the
Private Placements contain representations, warranties, covenants and conditions customary for
transactions of a similar nature. The common shares to be issued pursuant to the Private Placements
will be subject to a statutory four-month hold period from the date of issuance in acco rdance with
applicable Canadian securities legislation.
The Cerrado Private Placement
Cerrado has entered into a subscription agreement with Ascendant to subscribe for 17,142,857
Ascendant Shares for gross proceeds of CA$900,000. Cerrado currently holds a total of 16,417,625
Ascendant Shares, which represents approximately 8.78% of the issued and outstanding Ascendant
Shares (on a non -diluted basis). Upon completion of the Cerrado Private Placement (which is
contemplated to occur contemporaneously with the completion of the first tranche of the Sprott
Private Placement) (as described below)) , Cerrado would be expected to hold in aggregate
33,560,482 Ascendant Shares representing approximately 14.5% of the then issued and outstanding
Ascendant Shares (on a non-diluted basis and considering the concurrent issuance of the Tranche 1
Deferred Interest Shares (as defined below) under the Sprott Private Placement).
The proceeds of the Cerrado Private Placement are expected to enable Ascendant to further
advance its ongoing development of the Lagoa Salgada project in Portugal and to fund certain other
short term payable obligations and for general corporate purposes, including certain Transaction-
related costs, during the interim period of the Arrangement.
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The Sprott Private Placement
Sprott has agreed to convert the total amount of Deferred Interest under the Sprott Note into
Ascendant Shares C$0.0525 per Ascendant Share. As of the date hereof, the Deferred Interest
amounts to approximately US$1,660,172 which is equal to approximately CA$2,392,972 at an
exchange rate of CA$1.4414:US$1.00.
The conversion of the Deferred Interest at CA$0.0525 per Ascendant Share will result in the issuance
of approximately 45,580,417 Ascendant Shares (the “ Deferred Interest Shares ”) to Sprott in full
satisfaction of the outstanding Deferred Interest. Sprott currently owns and controls 18,482,411
Ascendant Shares, which represents approximately 9.9% of the issued and outstanding Ascendant
Shares (on a non -diluted basis). Accordingly , it is anticipated that upon issuance of the Deferred
Interest Shares Sprott wo uld acquire in aggregate ownership and control of a total of 64,062,828
Ascendant Shares which is expected to represent approximately 25.65%. Accordingly, the Sprott
Private Placement will be completed in two tranches, pursuant to which a portion of the Deferred
Interest would be converted into Deferred Interest Shares (the “ Tranche 1 Deferred Interest
Shares”) that would result in Sprott acquiring ownership and control of approximately 19.9% of the
issued and outstanding Ascendant Shares immediately following that first tranche closing and the
contemporaneous closing of the Cerrado Private Placement. The conv ersion of the remaining
Deferred Interest into Deferred Interest Shares that would result in Sprott acquiring ownership and
control over 20% or more of the outstanding Ascendant Shares would be subject to shareholder
approval, in accordance with TSX rules, which would be sought at the Ascendant Special Meeting.
The Sprott Private Placement will improve Ascendant’s current financial situation by enabling it to
extinguish a significant portion of short -term payable in respect of the Deferred Interest without
deploying any cash resources.
Timing
The Cerrado Private Placement and the Tranche 1 Deferred Interest Shares to be issued under the
Sprott Private Placement are expected to be completed on or about February 11, 2025, and in any
event as promptly as possible following receipt of the conditional approval of the TSX and approval
of the TSX-V.
The Arrangement Agreement will be filed on SEDAR+ profiles of Ascendant and Cerrado on the
SEDAR+ website at www.sedarplus.com.
Advisors and Counsel
WeirFoulds LLP is legal counsel to Cerrado. Stifel Nicolaus Canada Inc. acted as financial advisor to
the Special Committee of Ascendant and Sotos LLP is legal counsel to Ascendant.
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Conference Call Details
Cerrado Gold Management will host a conference call on February 3, 2025, at 10:00 AM to discuss
the details of the proposed transaction and take stakeholder questions. The presentation for the
call can be found on Cerrado Gold’s website at cerradogold.com. Call details are as follows:
Pre-Registration for Conference Call
Participants can preregister for the conference by navigating to:
https://dpregister.com/sreg/10196598/fe6ceab5c0 and will receive dial -in numbers to connect
directly upon registration completion.
Those without internet access or unable to pre-register may dial in by calling:
PARTICIPANT DIAL IN (TOLL FREE): 1-844-763-8274
PARTICIPANT INTERNATIONAL DIAL IN: 1-647-484-8814
Review of Technical Information
The scientific and technical information from Minera do n Nicolas in this press release has been
reviewed and approved by Cid Bonfim, P. Geo., Senior Geologist Cerrado Gold , and Pierre Jean
LaFleur, P. Geo., VP Exploration for Voyager Metals, a 100% owned subsidiary of Cerrado Gold, are
Qualified Persons 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, Argentina . 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
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
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Mike McAllister
Vice President, Investor Relations
Tel: +1-647-805-5662
Disclaimer
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS
DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.
Cautionary Note Regarding Forward-Looking Statements:
This release contains "forward -looking information" or "forward -looking statements" within the
meaning of applicable Canadian and United States securities legislation, respectively. All statements,
other than statements of historical fact, are forward -looking statements. Forward -looking
statements include, but are not limited to, statements or information related to: the expected
benefits of the Arrangement and Private Placement and the details related to the expected
completion of each of these transactions.
Forward-looking statements are based on the reasonable assumptions, estimates, analyses and
opinions of management of Cerrado, made in light of its experience and perception of trends, current
conditions and expected developments, as well as other factors that Cerrado believes to be relevant
and reasonable in the circumstances at the date that such statements are made, but which may
prove to be incorrect. Cerrado’s management believe s that the assumptions and expectations
reflected in such forward -looking statements are reasonable. Assumptions have been made
regarding, among other things: obtaining shareholder, regulatory and court approvals, and the
timing therefor; Cerrado's and Ascendant's abilities to carry on exploration and development
activities, including construction; the timely receipt of required approvals; the price of gold, copper,
zinc, iron ore and other precious and base metals; prices for key mining supplies, including labor costs
and consumables, remaining consistent with the two companies' current expectations; production
at Minera Don Nicolas meeting expectations; the Mont Sorcier Iron Ore and Vanadium and the Lagoa
Salgada projects being developed as anticipated; plant, equipment and processes operating as
anticipated; there being no material variations in the current tax and regulatory environment;
Cerrado's and Ascendant's abilities to operate in a safe, efficient and effective manner; the exchange
rates among the Canadian dollar, United States dollar and Argentine peso remaining consistent with
current levels; and the combined company's ability to obtain financing as and when required and on
reasonable terms. Readers are cautioned that the foregoing list is not exhau stive of all factors and
assumptions which may have been used.
Forward-looking statements are subject to known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from those expressed or implied by
such forward -looking statements. Such risks, uncertainties and ot her factors include but are not
limited to: the fluctuation of the price of gold, iron ore and other precious and base metals; changes
in national and local government legislation, taxation and controls or regulations and political or
economic instability; the availability of additional funding as and when required; the speculative
nature of mineral exploration and development; the timing and ability to maintain and, where
necessary, obtain necessary permits and licenses; the uncertainty in the estimation o f mineral
resources and mineral reserves; the uncertainty in geologic, hydrological, metallurgical and