Cerrado Gold Summary (April 2025)
- Current Production:
- Don Nicholas mine in Argentina producing ~50,000 oz/year.
- Breakeven cost (FCF) around $1,900/oz.
- Mine life: ~4 years (needs exploration success to extend).
- Property size: 750,000 acres with lots of drill targets.
- March 2024:
- Sold Monte Do Carmo (MDC) in Brazil to Hochschild for $60M.
- MDC had 1.5M oz resource and was construction-ready at $600/oz AISC.
- Current Valuation:
- Market cap very low, trading at ~1x FCF.
- Potential 10-bagger if mine life is extended.
- Stock down from $1.50 (2021) to ~$0.29.
- 2025 Acquisition:
- Acquired Ascendant Resources in all-share deal (14% premium).
- Key asset: Lagoa Salgada (Portugal) VMS project.
- 20M oz silver (35 gpt), 14-year mine life.
- Target: 1M oz silver/year.
- 34% precious metals, 66% base metals.
- Capex: $165M.
- Construction start: 2026. Production: 2027.
- Financials (as of March 2025):
- Cash: $20M.
- Current liabilities: $141M.
- Total liabilities: $322M.
- Debt expected to fall to $9M by year-end.
- 2025 FCF run rate: ~$50M at $2,900 gold.
- Iron Ore Project (Sorcier, Quebec):
- Flagship project with 1B tons at 67% Fe.
- In-situ value: ~$100B.
- Capex: ~$600M.
- Potential FCF: $250M/year.
- Feasibility study underway ($10M cost).
- Target build date: ~2030.
- Options: Build, JV, or sell.
Stock price calculation for Cerrado Gold:
- Gold Price: $4,000/oz
- Silver Price: $100/oz
- Gold Production (Don Nicholas): 50,000 oz/year
- Silver Production (Lagoa Salgada): 1,000,000 oz/year
- Gold Costs: $1,900/oz
- Silver Costs: $20/oz
- FCF Multiple: 20
- Shares Outstanding: 100 million (assumed)
Free Cash Flow:
- Gold FCF = ($4,000 - $1,900) × 50,000 = $105,000,000
- Silver FCF = ($100 - $20) × 1,000,000 = $80,000,000
- Total FCF = $185,000,000
Valuation:
- Market Cap = $185M × 20 = $3.7 Billion
- Stock Price = $3.7B / 100M shares = $37.00 per share
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