CORRECTION: Cerrado Gold Announces Positive Feasibility Study Results for Its Monte Do Carmo Gold Project, Brazil In a release under the same headline released Thursday
CORRECTION: Cerrado Gold Announces Positive Feasibility
Study Results for Its Monte Do Carmo Gold Project, Brazil
In a release under the same headline released Thursday November 2, 2023 by Cerrado Gold
Inc. (TSXV:CERT)(OTCQX:CRDOF), please note that the results in original press release
were impacted by a computational error which resulted in incorrect NPV and IRR figures
being published. As a result, the After Tax NPV5% declined to $369 million from $401 million
and the IRR declined from 34% to 32%." All other information is unchanged. The corrected
release follows:
Cerrado Gold Announces Positive Feasibility Study Results for Its Monte Do Carmo Gold
Project, Brazil, Including an After-Tax NPV5% of US$369 Million With an IRR of 32%
Highlights
• After-Tax NPV of US$369 million and IRR of 32%
• Average annual gold production of 94,797 ounces per annum over 9 year Life of Mine
("LOM")
• Average AISC of US$711 per ounce over LOM
• Initial Capex of US$186.6 million (including US$15.8 million contingency)
o 2:1 ratio of NPV over Initial Capex
• Annual average free cash flow of $85 million over the LOM, with total cumulative
after-tax free cash flow of $562 million over LOM
• Initial Proven and Probable Reserves of 895 koz of Gold (16.8 Mt at 1.66 g/t Au)
• Updated Measured and Indicated Resources of 1,012 koz of Gold (18.4 Mt at 1.72 g/t
Au) and Inferred Resources of 66 koz of Gold (1.1 Mt at 1.95 g/t Au)
(All numbers reported in US dollars, unless specifically stated otherwise)
TORONTO, ON / ACCESSWIRE / November 7, 2023 / Cerrado Gold Inc.
(TSXV:CERT)(OTCQX:CRDOF) ("Cerrado" or the "Company") is pleased to announce the
very positive results of an independent Feasibility Study ("FS") prepared by DRA Global
Limited ("DRA") in accordance with National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101") on its 100% owned Monte do Carmo gold project located in
Tocantins State, Brazil. The results of the Feasibility Study supersede the 2021 Updated
Preliminary Economic Assessment dated July 21, 2021 entitled "Independent Technical Report -
Update Preliminary Economic Assessment for Serra Alta Deposit" filed on SEDAR by GE21
LTDA on October 7, 2021.
The FS outlines a robust project, with low capital costs and low operating costs generating
significant Free Cash Flow over a 9 year mine life. The FS is focused on the principal Serra Alta
deposit and the smaller satellite deposit of Gogo Do Onca and provides a scalable base of
production for future potential exploration success.
Monte do Carmo is expected to commence production at a rate of 1.92Mtpa from the open pit for
total production of 709,920 ounces. In Year 4, simultaneous underground development will be
initiated contributing an additional 143,252 ounces over five years of operation.
Two open pit operating scenarios were analyzed for cost estimation purposes. The first scenario
involved a traditional owner-operated model, while the second scenario explored a contractor-
operated model. Over the 9-year life of the mine, it was found that the owner-operated option
produced a higher NPV although with some reduction in IRR. Consequently, this study adopted
the owner-operated option for both the Open Pit and Underground Operations.
Ore is processed at the plant using conventional concentration and cyanide leaching of gold
concentrates. Tailings will be disposed of using a combination of best in practice dry stack, co-
stacking and in-pit filling techniques.
The Company remains on track to receive the construction permit by the end of this year and is
progressing Project Financing with an aim to make a fully financed construction decision in Q2
2024.
Mark Brennan, CEO and Chairman, stated: "We are extremely pleased that the results of this
Feasibility Study demonstrate that Monte do Carmo is an extremely robust project with low
capital and operating costs that provide an approximate 2:1 ratio of NPV over Capex. While this
error is unfortunate, the project remains one of the most financially robust smaller-scale
development projects in the Americas.
He continued, "The low capital and operating costs at Monte Do Carmo provides that ability for
Cerrado to generate more cashflow from our ~100kozpa operation than most mines with
substantially greater amounts of production."
Summary of Key Results and Overall Project Economics
Production Units Value
Steady State Throughput Mtpa 1.92
Average Annual Production K oz per annum 94,797
Life of Mine Years 9.0
Life on Mine Au Recovery % 95.23
Total Ore Mined - Open Pit Mt 14.3
LOM Average Stripping Ratio x 7.84
Total Ore Mined - Underground Mt 2.5
Total Recovered Gold (Payable) Ounces 853,172
Operating Costs Units Value
Open Pit Mining US$/tonne 16.83
Underground Mining US$/tonne 22.86
Processing US$/tonne 9.32
Water and Tailings Management US$/tonne 1.45
G&A US$/tonne 2.43
Total Cash Costs US$/oz 604.2
AISC US$/oz 710.8
Capital Expenditure Units Value
Initial Capital US$ M 170.8
Contingency US$ M 15.8
Total Upfront Capital US$ M 186.6
Sustaining Capital US$ M 68.8
Closure Costs US$ M 15
Total Capital US$ M 270.4
Financial Results Units Value
Pre-Tax NPV US$ M 441
Pre-Tax IRR % 35
Pre-Tax Payback Period Years 2.2
After Tax NPV US$ M 369
After Tax IRR % 32
After Tax Payback Period Years 2.4
Assumptions Units Value
Gold Price US$/oz 1,750
Discount Rate % 5.0
A technical report summarizing the Feasibility Study will be completed in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral Projects , and will be filed
and available on SEDAR+ within 45 days of this Press Release.
Monte do Carmo Project Overview
The Monte do Carmo Gold Project is located in the state of Tocantins, Brazil; 2 km east of the
town of Monte do Carmo, 40 km from Porto Nacional and 100 km from Palmas, the capital of
Tocantins state. The Serra Alta deposit has been the main focus of exploration and development
at the Monte do Carmo Project. Cerrado has conducted preliminary drilling on several analogue
satellite deposits however the Company has been mostly focused on infill drilling at Serra Alta to
support the Feasibility Study. The Project benefits from convenient access to essential
infrastructure including paved roads, energy, 69 kV electrical power line, water supply, and an
international airport, and is well supported by the local community.
Geology, Mineralization and Drilling
The regional geology of the Monte do Carmo area is characterized by multiple volcanic-
sedimentary sequences with a number of intrusive suites spanning from the Lower to Upper
Proterozoic eras, as well as younger Paleozoic sedimentary successions. The Serra Alta deposit
itself is hosted by a cupola of the Monte do Carmo Granite (Paleoproterozoic Ipueiras Intrusive
Suite) within the Neoproterozoic Araguaia Belt of Tocantins state, located within the broader
Trans-Brazilian Lineament.
At the deposit scale, the Monte do Carmo Granite, along with other later felsic and mafic-
ultramafic layered intrusions, intrudes felsic volcanic rocks of the Santa Rosa Suite with an
overlying (faulted contact) discontinuous quartzite remnant, possibly of the Upper Proterozoic
Monte do Carmo Formation. The entire package is in turn unconformably overlain by flat-lying
Paleozoic (Meso-Neo Devonian) ferruginous sediments of the Pimenteiras Formation, subject to
relatively intense subaerial weathering (i.e., laterite and saprolite development).
The Serra Alta deposit is interpreted as an intrusion-related gold system, with mineralization
associated with hydrothermally altered and locally veined granitic rocks. Abundant mineralized
shoots are clearly controlled by varying densities of vein and veinlet swarms that are weakly
enriched in sulphides (pyrite, galena, sphalerite and chalcopyrite). The deposit currently
comprises 8 main zones that span approximately 2 km of strike length (oriented 190-195 o ) with
an overall width of ~600 m, and dip moderately to steeply (55-75 o ) to the west-northwest with a
vertical extent on the order of 200 m. In general, individual mineralized lenses (i.e., shoots)
range from approximately 5 m to greater than 30 m in width.
Sheeted vein sets mostly follow the overall deposit trend; however, the presence of multiple
mineralized vein orientations indicates a more complex system that evolved over several
mineralization and deformation events, as evidenced by the structural history of the area. There
are two main northeast-trending (~N30 o E) faults that flank the mineralization at Serra Alta, with
a series of smaller east-west (± 30 o ) faults that delimit the deposit into discrete structural blocks;
as such, each zone was modelled and estimated individually to respect these constraining
features. The lateral extent of the sheeted vein swarms is wider towards the intrusive contact
between the main granitic host rocks and overlying felsic volcanics; this intrusive contact acts as
a cap throughout much of the deposit.
Modern exploration at the Monte do Carmo Project began in 1985 by Verena Mineração Ltda
(VML). A total of 8,629 m of historical drilling in 75 holes has since been completed by several
companies, including VML (eventually Monte Sinai Mineração), Paranapanema and Kinross;
Rio Tinto also drilled an additional 3,894 m in 53 reverse circulation holes. This work focused
on a variety of regional targets in addition to Serra Alta. Recent exploration drilling by Cerrado
includes a total of 108,987 m completed in 439 holes up to the database cut-off date of December
31, 2022. The current Mineral Resource Estimate (MRE) includes a total of 12,690 composite
sample intervals in 338 holes that intersect the interpreted mineralized domains used for
estimation. Historical drilling has been vetted for quality and consistency purposes; only holes
that meet a stringent multi-criteria standard were maintained in the database for use in the MRE.
In terms of expansion potential, while the Serra Alta deposit has generally been well-tested,
prospective areas of interest to extend mineralization remain both to the east and north, as well as
to depth. Additionally, the Monte do Carmo region in general remains highly prospective for
exploration potential with multiple high-priority targets already identified within the Cerrado
land package.
Data Verification
DRA performed data verification and validation procedures on the drilling database prior to
modelling and estimation. DRA reviewed the geological, drilling and analytical data, including
the implemented Quality Assurance / Quality Control ("QA/QC") measures, used to support
Mineral Resources. Additionally, the QP of Geology and Resources completed a visit to the
Project site in order to review overall site geology, drill core, core shack facilities, sample
storage and security, as well as to conduct interviews with key site personnel. It is the opinion of
the QP that the provided geological database is of sufficient quality for use in the estimation and
classification of Mineral Resources, according to CIM guidelines and industry best practices.
Mineral Resource Estimate
The MRE was established using data from boreholes drilled and sampled up to December 31,
2022. The in-pit resource estimate for the Serra Alta deposit includes Measured and Indicated
Resources of 15,304 kt @ 1.65 g/t Au for 812 koz, and Inferred Resources of 345 kt @ 1.36 g/t
Au for 15 koz; the underground portion includes Measured and Indicated Resources of 3,054 kt
@ 2.03 g/t Au for 199 koz, and Inferred Resources of 708 kt @ 2.24 g/t Au for 51 koz. The
resource estimate has been prepared using a marginal cut-off grade of 0.26 g/t Au for the in-pit
resources; underground resources include low-grade blocks falling within underground reporting
shapes to reflect realistic mining logistics. Both the open-pit and underground resources are
reported using a gold price of US$1,850. Additional details on mining and processing modifying
factors are provided in the footnotes for the table below.
Serra Alta Deposit (Brazil) - Mineral Resources Summary, DRA Global Limited,
October 31, 2023
Category Tonnage
(kt)
Average
Grade
(g/t Au)
In-Situ
Ounces
(koz Au)
Open-Pit 3,4,5
Measured 2,014 1.73 112
Indicated 13,290 1.64 700
Measured +
Indicated 15,304 1.65 812
Inferred 345 1.36 15
Underground
6,7,8
Measured 42 1.66 2
Indicated 3,012 2.04 197
Measured +
Indicated 3,054 2.03 199
Inferred 708 2.24 51
Total
Measured 2,056 1.73 115
Indicated 16,302 1.71 897
Measured +
Indicated 18,358 1.72 1,012
Inferred 1,053 1.95 66
Notes:
1. The Mineral Resource Estimate has been estimated using the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) Definitions Standards for Mineral
Resource and Mineral Reserve in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects. Mineral Resources which are not
Mineral Reserves, do not have demonstrated economic viability.
2. Inferred Mineral Resources are exclusive of the Measured and Indicated Resources.
3. In-pit Resources are constrained by a Pseudoflow optimized pit shell using HxGn
MinePlan tm software.
4. Pit shell was developed using a 50-degree pit slope, gold sales price of US$1,850/oz,
mining costs of US$2.60/t, stockpile rehandling costs of US$0.60/t, processing costs
of US$10.14/t, tailings costs of US$1.45/t, G&A costs of US$2.43/t, process
recovery of 96.5%, refining costs of US$12.00/oz, transportation costs of
US$10.74/oz, discount rate of 5%, and assumed production rate of 1.920 Mtpa.
5. In-pit estimates are reported in-situ, at a marginal cut-off grade of 0.26 g/t Au.
6. Underground mining stope optimization was performed using Deswik tm software.
7. Stope shapes were developed using a gold sales price of US$1,850/oz, mining costs
of US$24.18/t, processing costs of US$10.14/t, tailings costs of US$1.45, G&A costs
of US$2.43/t, process recovery of 95.3%, refining costs of U$12.00/oz,
transportation costs of US$10.74/oz, and assumed production rate of 1,500 t/d.
8. Underground resources were estimated using a cut-off grade of 0.69 g/t Au;
however, the reported in-situ figures include low-grade blocks estimated within
underground reporting shapes.
9. Resource estimations were interpolated using Inverse Distance Weighting (IDW 3 );
Similarly, variable densities were interpolated using IDW 2 .
10. The effective date of the Mineral Resource Estimate is October 31, 2023.
11. Figures have been rounded to an appropriate level of precision for the reporting of
Mineral Resources. As a result, totals may not compute exactly as shown.
A plan map of the immediate Serra Alta deposit area (shown below) depicts the grade
distribution at surface of the estimated Mineral Resources with respect to the optimized pit shell.