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Cerrado Gold Inc V.CERT

Alternate Symbol(s):  CRDOF

Cerrado Gold Inc. is a Canada-based gold production, development, and exploration company focused on gold projects in South America. It is an owner of both the producing Minera Don Nicolas and Las Calandrias mine in Santa Cruz province, Argentina, and the Monte Do Carmo development project, located in Tocantins State, Brazil. In Canada, Cerrado Gold is developing its owned Mont Sorcier Iron Ore and Vanadium project located outside of Chibougamou, Quebec. The Minera Don Nicholas property is located in the mineral rich Deseado Massif in the province of Santa Cruz, totaling 333,340 ha's of concessions. The property operates mining from two separate open pit areas, La Paloma and Martinetas. The Monte Do Carmo project is located in state of Tocatins, with claims totaling 82,541 ha of concessions. The Mont Sorcier Iron ore property hosts a large Iron resource with extractable Vanadium in a mining jurisdiction. The Property is located 18 km outside of Chibougamau, Quebec by road Mont Sorcier.


TSXV:CERT - Post by User

Comment by ABDPhilon Jun 25, 2021 1:33pm
122 Views
Post# 33451173

RE:RE:RE:RE:RE:RE:RE:RE:Open your eyes wide

RE:RE:RE:RE:RE:RE:RE:RE:Open your eyes wide
The AISC measurement is a calculation based on ounces sold, not ounces produced. In the first quarter, 7,485 ounces were produced while 6,584 ounces were sold. Therefore, the AISC measurement in 2021-Q1 was negatively affected by this 901-ounce difference. As mentioned in the IFRS accounting presentation rules, these 901 ounces were recorded in inventories at cost. This IFRS presentation rule has the effect of favoring companies with high production costs such as Cerrado, at least on the financial balance sheet.
 
Regarding these 901 ounces, they were probably sold at the beginning of 2021-Q2, which will rebalance the situation produced in 2021-Q1 and positively affect the AISC measurement in 2021-Q2. Unfortunately, this rebalancing will only be partial as the decline in the average value of gold in the markets will reduce net profit by approximately $ 500,000, estimating a similar production of 7,485 ounces of gold.
 
Therefore, it is far too early to shout "WOW" and conclude that there is an incredible turnaround here. In addition, the analysis of the AISC measure is not really relevant when the period compared considers less than a year. In conclusion, the sale of all the ounces produced in 2021-Q1 would have presented a better performance of the AISC measure in 2021-Q1 and a poorer performance in 2021-Q2.
 
@ Beluga2020: My intention is not to destroy your joy. Better understanding makes us more careful. The AISC measurement can be affected by several parameters and it is by analyzing all these parameters that you will be able to judge whether changes have been implemented to improve the performance of the mine in a sustainable way. Personally, I haven't seen anything like it in Cerrado's press releases.
 
Regarding the reassuring message about a possible dilution of the shareholding, this is only a goal. The reality about the current cash flow is that it is not sufficient to support a single quarter's production costs. Therefore, Cerrado has an obligation to perform better by reducing its production costs significantly. Due to the fact that Cerrado relies heavily on subcontracting in its operations, the possible interventions are very limited.
 
The reduction in its costs could eventually lead to a positive cash flow, but this operating margin will be continually swallowed up in the stripping of new areas and in the drilling costs necessary for the sustainability of the mine located on the Minera Don Nicolas permit. The low capacity of the MDN plant and the low estimated profit margin simply cannot finance the Monte De Carmo development work let alone the work on the Las Calendrias and Los Cisnes permits. And as already mentioned, a more substantial reduction in production costs on MDN would require investments in the acquisition of equipment, with the aim of reducing subcontracting and increasing operating margins.
 
In conclusion, I still say that share ownership dilution is inevitable and that all financial efforts should be focused on MDN. Cerrado's growth should not be deceived because first and foremost it must protect its cash flow in order to resolve MDN's structural problems. The efficiency of this plant is what will eventually allow Cerrado to grow on a solid footing. All of this will take time and money. Be careful.
 
@ Mulli15: Considering Cerrado's financial situation and the new capital that will be required to make MDN efficient, this would be a very poor investment choice for me. I am not ruling out the idea but significant improvements will have to be made first and be reflected in the financial statements.
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