A year ago, Toronto-based Cerrado Gold (TSXV: CERT) acquired 100% of the Minera Don Nicolás (MDN) property in southern Argentina from a group of private investors.
The project, about 1,600 km southwest of Buenos Aires in the Patagonian province of Santa Cruz, has nine pits, three of which are currently in production, and about twelve high-priority exploration targets.
MDN has been producing small amounts of gold intermittently since 2017, and has a central carbon-in-leach mill with a processing capacity of 1,000 tonnes per day.
But it was the exploration potential across Cerrado’s 333,400-hectare concession in the Deseado Massif that really caught the imagination of the company’s CEO and co-chairman Mark Brennan. Most of the drilling completed by the previous owners was targeted at open-pittable targets and to shallow depths of less than 100 metres from surface.
“When we acquired MDN, there hadn’t been any drilling done in five years, so our first and foremost goal was to update the [historic] resource estimate,” he said. “This region is rich with deposits and we saw a tremendous upside for resource expansion at MDN.”
AngloGold Ashanti’s (NYSE: AU) Cerro Vanguardia mine and Yamana Gold’s (TSX: YRI; NYSE: AUY; LSE: AUY) Cerro Morro lie within 100 km of MDN, Brennan said, and much of the area has seen very little exploration.
“This entire region is vastly underexplored — but it’s like Nevada, it’s so productive,” he said.
In late August, SRK completed MDN’s first 43-101 compliant resource, estimating 1.13 million measured and indicated tonnes grading 5.49 grams gold per tonne and 8.37 grams silver per tonne for 198,808 oz. gold and 241,903 oz. silver and another 4.66 million inferred tonnes grading 2.33 grams gold per tonne and 4.78 grams silver for 348,693 oz. gold and 320,118 oz. silver.
In February the company kicked off a 12,000-metre exploration program and recently released results from the first eight holes drilled.
Among the results, drill hole PA-D21-42 returned a 17 metre intercept grading 17.91 grams gold per tonne from 56 metres downhole, including 36.84 grams gold per tonne over 6.5 metres. Another hole, PA-D21-44, returned a 15.69 metre intercept grading 7.8 grams gold per tonne from 46.3 metres downhole, including 10.7 grams gold per tonne over 10.95 metres.
The current exploration program at MDN consists mainly of step-out and downdip drilling, Brennan said, and is intended to delineate near-surface mineralization that can be brought into production in the near term. The initial focus has been a target at MDN called Baritina, where work began on February 5.
The company plans to use cash flow from the open pits to pay for exploration at 12 brownfield targets.
This year Brennan hopes the three pits can produce between 45,000 and 55,000 oz. of gold this year at all-in sustaining costs of US$1,100 to US$1,150 per ounce.
“We’ve had our hands full getting things back up to speed,” he said. “There were obviously some issues that affected our production last year. Covid restrictions put in place by the government limited our operations.”
In addition to the US$15 million Cerrado paid for MDN at closing, it must pay a series of staged payments totalling US$30 million over the next five years.
At press time Cerrado was trading at $1.10, within a 52-week range of 93¢ and $1.25. The company has just over 70 million shares outstanding for a market cap of $77.6 million.