Impact: Neutral
Cerrado (CERT) reported Q1/24 results and production from its Minera Don Nicolas (MDN) operation in Argentina. It produced 11,204 oz AuEq in Q1/24 at an AISC of $2,045/oz and sold 10,331 oz AuEq to generate revenues of $20.4M (all financials in US$). EPS of neg $0.07 (or neg $7.3M) beat our estimate of neg $0.12/sh, reflecting lower corporate G&A expenses. The high AISC of $2,045/oz was due to inflation, lower grades and production during Jan and Feb, and the large amount of waste mined during the quarter, particularly due to pre-stripping at Calandrias Norte. In our opinion, while it was a challenging quarter for CERT, this was already anticipated from the previously reported production numbers. The company’s operations appear to be on a better track, with production from Calandrias Norte stabilizing and the heap leach finally ramping up. CERT shareholders have approved the sale of MDC to Hochschild, which means it does not have to pay back the initial $15M received from Hochschild as part of this transaction (read notable). This cash along with the ramp-up in heap leach operations should help CERT survive and pay down debts until receipt of the next $30M in payments in H1/25.
