May 31, 2021
Cerrado Gold Inc. (TSXV:CERT, BUY, C$3.30 target, Timothy Lee) reported its first quarter (Q1/21) operational and financial results; the company’s first complete quarter as a public company. While production results from its 100%-owned, Minera Don Nicolas (MDN) mine in Argentina had already been reported earlier this month (read more), the Q1/21 results are beginning to show the impact of the operational improvements being implemented over the course of the last few months by the Cerrado management team. Cerrado acquired the MDN mine in March 2020 from a group of Argentinian investors who were not experienced in the mining industry, and the MDN mine was running well below optimum levels. Although the company reported a net loss of US$5.67M (EPS of -US$0.10), the key takeaway here is that Cerrado is still in ramp up and optimization mode at MDN, and that it is showing significant improvement across the board compared to previous quarters and years, despite the challenges from COVID-19. The company reported revenues of US$11.6M, gross margin of US$32k and positive adjusted EBITDA of US$0.96M (vs. -US$2.47M in Q4/20). Importantly total cash costs were US$1,363/oz (-18% QoQ) and AISC was US$1,747/oz (-9% QoQ). Reported cash balance for the quarter was ~US$14M, which in our opinion will adequately fund the exploration drilling programs underway at both the MDN mine and Monte do Carmo project located in Brazil (read more). We believe these results should be viewed positively, and we expect the operational improvements to continue at MDN throughout the course of 2021. Read more
