Cerrado Gold Ramps MDN Heap Leach as Underground Build-Out and Q1 2027 PEA Take Shape

## Operating engine: Minera Don Nicolas

The center of gravity at Cerrado Gold (TSXV: CERT, OTCQX: CRDOF) sits at the producing Minera Don Nicolas (MDN) gold mine in Argentina, and CEO Mark Brennan told the KE Report the operation is "running on all cylinders." Q2 heap leach output came in at roughly 10,000 ounces — the bulk of MDN's production — and the company is targeting a steady 4,000 to 4,500 ounces per month from the pads. Brennan said earlier water issues from the first part of the quarter have been resolved.

Underground mining at the Paloma zone, started about a year ago, remains "de minimis" in the production mix but is the engine Brennan wants to turn on next. A new underground drill rig, ordered seven months ago and imported from outside Argentina, just arrived on site. Brennan compared the play to neighboring Cerro Moro (Pan American Silver, the old Yamana project) and Anglo's Cerro Vanguardia, both of which moved from open pit into underground and ran materially higher output. Cerrado's mill is 1,200 tonnes per day versus Cerro Moro's 1,300 — Brennan argues the "plumbing is in place," and what's missing is feed.

## The blend: how ore moves through MDN

Brennan walked through the grade routing. Heap leach feed at the Calandria Sur area runs about 0.8 g/t on average and tops out near 1.2 g/t going onto the pads. Anything higher grade — roughly 1.5 g/t and up — gets trucked to the CIL plant (carbon-in-leach, a process that uses activated carbon to pull gold out of crushed ore) and blended with underground ore, which the company expects to average around 5 g/t. Surface stockpiles running 1.0-1.2 g/t fill the gap while underground tonnage ramps. The plant is "underutilized right now," which is why Brennan frames the exploration program as the binding constraint, not processing capacity.

## Q1 2027 PEA and the Falcon effect

The near-term catalyst is a PEA (preliminary economic assessment — an early-stage study that scopes the size and economics of a mining project) targeted for Q1 2027. Brennan said the study's two stated objectives are higher production and a five-year-plus mine life, up from MDN's roughly three-year life before the recent acquisitions. The Falcon deal, picked up from Pan American Silver, consolidates a northern block alongside Calandria Sur and the recently renamed Calandria 2. Brennan said Falcon alone extends mine life to five or six years, with internal ambitions to push MDN to "100,000 ounce plus" production over two steps — the Q1 PEA being step one.

To support that, the company is running a 70,000-meter drill program split between surface and underground work, focused on infill drilling to convert the resource picture into something a technical report can quantify. H1 production came in around 28,000 ounces, putting the company "comfortable with all ranges" of 50,000-60,000 ounce guidance and leaning toward the upper end.

## Lagoa Salgada: polymetallic optionality awaiting permits

Lagoa Salgada in Portugal is a polymetallic deposit — gold, silver, zinc, lead, copper, tin — and Brennan argues it could end up as one of Europe's first new critical-minerals mines. The current feasibility study shows NPV (net present value — the sum of future cash flows discounted back to today's dollars) of about $150 million and roughly $75 million per year in cash flow over a 14-year mine life, and Brennan expects the optimized feasibility numbers to land "better than that." Updated economics are targeted for early September.

The bottleneck is regulatory, not geology. On June 17 the company was granted an injunction following a negative opinion from APA (Portugal's environmental agency) on water management and aquifer concerns. Brennan pushed back hard, noting that 16 of 17 technical evaluation committee members have approved the project and that the company is working with international hydrology experts plus the University of Lisbon to address the remaining concerns. The plan is to refile for the environmental impact assessment and detailed engineering by December; if approvals land, construction would take roughly 18 months, putting first production at Q1 2029. Financing sits at 70% debt via UCAF/trade finance with the remaining 30% funded internally from MDN cash flow — Brennan says no equity issuance is planned.

## Mont Sorcier: cleaner iron, longer clock

Mont Sorcier in Quebec is the third leg — a high-grade iron project Brennan argues is materially undervalued. The bankable feasibility study has been pushed back a quarter or two to fold in "four or five areas" of optimization after inflation pressure on the prior PEA. The bigger time sink is environmental licensing: filing triggers a roughly two-year review, putting any production decision several years out. Host Shad Markowitz noted that Mont Sorcier alone carried an NPV near $1.6 billion in the last study — against a Cerrado market cap around $250 million Canadian — and argued the asset is essentially unmonetized today.

## Capital structure: Sprott stream repurchase

On July 20, Cerrado announced a 100% repurchase of the Sprott streaming agreements on both MDN and Lagoa Salgada. Brennan framed the move as opportunistic — Sprott is winding down its streaming business — and said MDN's stream should pay back in about 18 months. On Lagoa Salgada, he argues the asset is "in its infancy" with tonnage expected to grow from the current 27 million tons to 150 million tons over the life of mine, and buying out the stream removes a future obligation.

## What to watch

Three reads will reset the narrative. First, the Q1 2027 MDN PEA — does the underground ramp and Falcon consolidation show a credible path from 50-60k ounces toward the 100k ounce ambition? Second, the optimized Lagoa Salgada feasibility in early September paired with the December EIA (environmental impact assessment) refile — does the company clear the APA hurdle and put a 2029 production date back on the table? Third, the Mont Sorcier BFS (bankable feasibility study) timing — a one-to-two-quarter slip is already on the table, but a meaningful uplift in project economics would reframe the iron leg. Until at least the first two move, MDN's cash flow carries the story alone.