Q4 2025 Cerrado Gold Inc Earnings Call

April 2, 2026

Okay.

Operator: Good day, and thank you for standing by. Welcome to Cerrado Gold's Q4 and Year-End 2025 Financial and Production Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Mike McAllister, Vice President, Investor Relations. Please go ahead.

Good day, and thank you for standing by welcome tastes Dorado skull Q.

Q4, and year end 2025 financial and production results conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.

I ask a question during the session you'll need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to turn the conference over to your speaker for today, Mike Mcallister, Vice President Investor Relations. Please go ahead.

Mike McAllister: Good morning, and thank you, operator. I'd like to note that today's call may contain forward-looking information that is based on the company's current expectations, estimates, and beliefs. Please review this slide and the other forward-looking information contained on page two of today's presentation, as well as in the company's annual information form, which is publicly available on SEDAR+ and the company's website. The accompanying presentation for today's call is available for download from the company's website at www.cerradogold.com. The accompanying press release is also posted on the website and on SEDAR+. Please note that all dollar amounts mentioned on today's call are in US dollars unless otherwise noted. Following management's presentation and remarks, a Q&A period will follow.

Good morning, and thank you operator I'd.

I'd like to note that today's call may contain forward looking information that is based on the company's current expectations estimates and beliefs.

Please review this slide and the other forward looking information contained on page two of today's presentation as well as in the company's annual information form which is publicly available on SEDAR plus on the company's website.

The accompanying presentation for today's call is available for download from the company's website at Www Dot Xylograph dotcom.

Accompanying press release is also posted on the website and on SEDAR plus. Please note that all dollar amounts mentioned on today's call are in U S dollars unless otherwise noted following managements presentation and remarks, and Q&A period will follow joining us on the call today are Mark Brennan, our CEO and chairman, Jason Brooks, our CFO Cliff.

Mike McAllister: Joining us on the call today are Mark Brennan, our CEO and Chairman, Jason Brooks, our CFO, Cliff Hale-Sanders, our President, Ed Guimaraes, our Executive Vice President, Andrew Croal, our Chief Technical Officer, Carl Calandra, our Vice President and Legal Counsel, and David Ball, our Vice President, Corporate Development. With that, I'd now like to turn the call over to our CEO, Mark Brennan.

Sanders, our president at Comerica are executive Vice President.

Andrew Crowe, our Chief Technical Officer, Karl Calandra, our Vice President legal counsel, and David Bower, Vice President corporate development.

With that I'd now like to turn the call over to our CEO Mark Brendan Thanks, Mike and I'd like to thank everyone for joining us today and I'd also particularly like to thank the shredder financial team and our auditors at Mcgovern early and grant Thornton for the delivery of the yearend results a full month in advance.

Mark Brennan: Thanks, Mike, and I'd like to thank everyone for joining us today. I'd also particularly like to thank the Cerrado Financial team and our auditors at McGovern Hurley and Grant Thornton for the delivery of the year-end results a full month in advance of the statutory requirement. You know, we've come a long way in the last two years on the financial reporting, and we're thrilled. 2025 has been a very successful transitional year for the company. Not only did we make a lot of money, you know, leaving our treasury and financial position very strong, but we've also made significant investments into each of our three projects, setting the stage for future success and growth for 2026 and beyond.

Of the statutory requirement, we we've come a long way in the last two years.

Financial reporting and we're thrilled.

2025 has been a very successful transitional year for the company not only do we make a lot of money leave you know, leaving our treasury and financial position very strong, but we've also made significant investments into each of our three projects setting the stage for future success and growth for 26 and beyond.

Mark Brennan: Our EBITDA for 2025 was $46 million, with our closing balance of cash at over $22 million. This has grown materially in Q1, and our prospects for 2026 look significantly brighter with gold trading at the 4,600 level. The results achieved in Q4 and for the full year demonstrate Cerrado's ability to maintain production at our MDN operation with stable operating costs as we transition from solely heap leach driven production to production sourced from underground, the heap leach and existing low stockpiles. This process has continued throughout Q1 of 2026, and we expect the underground to reach stable production levels in the latter part of Q2 of 2026.

Our EBITDA for 2025 was $46 million with a closing balance of cash at over $22 million. This has grown materially in the first quarter and our prospects for 2026 looks significantly brighter with gold trading up to 4600 level. The results achieved in the fourth quarter and for the full year demonstrates cerrado is ability to maintain.

Production at our MTN operation with stable operating costs as we tradition as we transitioned from solely heap Leach driven production to production source from underground the heap leach and existing low stockpiles and this process has continued throughout the first quarter of 2026, and we expect the underground to reach stable.

<unk> levels in the latter part of 'twenty.

Q2 of 2026, not only was 2025 is successful operationally, but organizationally, we have invested in people and systems to improve everything from cost control to reporting which as stated above we are very proud to say has enabled us to release, our financial results. One month ahead of schedule.

Mark Brennan: Not only was 2025 as successful operationally, but organizationally, we have invested in people and systems to improve everything from cost control to reporting, which, as stated above, we are very proud to say, has enabled us to release our financial results one month ahead of schedule. With elevated gold prices, we continue to generate significant cash flows, supporting our continued optimization and exploration efforts at MDN, which we expect will lead to an extension of the mine life and increased production. We expect to see robust economic potential with the completion of the bankable feasibility study at Mont Sorcier targeted for Q2 this year, and we continue the development process at the Lagoa Salgada project, while at the same time reducing debt and building a strong cash position, improving Cerrado's overall financial strength.

With elevated gold prices, we continue to generate significant cash flows supporting our continued optimization and exploration efforts at M. D M.

Which we expect will lead to an extension of the mine life and increased production, we expect to see robust economic potential with the completion of the bankable feasibility study and more surgically targeted for Q2. This year and we continued the development process until it goes out got a project while at the same time, reducing debt and building a strong cash position.

Improving cerrado is overall financial strength.

Mark Brennan: Following robust levels of adjusted EBITDA in Q4 2025, we continue to see strong cash generation into this quarter and throughout the year, especially now that the majority of our growth CapEx programs are nearing completion and the prior hedging program we had in place has been completed. Looking forward to 2026, operations at MDN are performing exceptionally well, and we are benefiting from continued strong gold prices, providing strong margins, leaving us to expect that the year will be another strong year for Cerrado. We are providing our 2026 production guidance of 50,000 to 60,000 geo-ounces within AISC of $1,800 to $2,000, with production weighted towards the second half of the year when the underground is expected to reach expected capacity.

Following robust levels of adjusted EBITDA in the fourth quarter of 2025, we continue to see strong cash generation into this quarter and throughout the year, especially now that the majority of our.

Growth Capex programs are nearing completion and the prior hedging program. We had in place has been completed.

Looking forward to 2026 operations that MTN are performing exceptionally well and we are benefiting from continued strong gold prices, providing strong margins, leaving us to expect that the year will be another strong year for cerrado.

We are providing our 2006.

2026 production guidance of 50 to 60000 ounces Geo ounces within <unk> of 18, and 100 to $2000.

With production weighted towards the second half of the year when the underground is expected to reach expected capacity.

Mark Brennan: Our focus for the coming year will continue to be on developing MDN, extending mine life, increasing production, and continuing to develop future cash generation by completing the feasibility studies at both our development projects in Portugal and Quebec with limited dilution. I'd now like to turn the call over to Jason Brooks to take us through the financial highlights.

Our focus for the coming year will continue to be on developing M. D M extending mine life, increasing production and continuing to develop future cash generation by completing the feasibility studies that both our development projects in Portugal, and Quebec with limited dilution.

I'd now like to turn the call over to Jason Brooks to take us through the financial highlights.

Jason Brooks: Thanks, Mark. Turning to slide three. In 2025, the company produced 50,238 gold equivalent ounces, with 13,806 gold equivalent ounces produced in Q4. Operational results for the full year of 2025 showed stable production relative to the previous year. 2025 was a transitional year as the company shifted to rely on production from the heap leach operations at Las Calandrias, while the underground continued to ramp up towards the end of the year. Production rates would have been higher. However, the heap leach pad was irrigated less than usual due to water availability constraints caused by very dry summer conditions late in the year.

Thanks, Mark and turning to slide three.

In 2025, the company produced 50238 gold equivalent ounces with 13806 gold equivalent ounces produced in the fourth quarter.

Operational results for the full year 2025 showed stable production relative to the previous year.

25 was a transitional year as the company shifted to rely on production from the heap Leach operations at Columbia.

While the underground continues to ramp up towards the end of the year.

Production rates would've been higher however, the heap leach pad was irrigated less unusual due to water availability constraints caused by a very dry summer conditions late in the year.

Jason Brooks: The all-in sustaining costs for the full year came in at $1,746 per ounce, with Q4 all-in sustaining costs of $1,391 per ounce, which was a result of the higher production in Q4. The company continued to focus on operating costs. Sorry, excuse me. The company's continued focus on operating costs enabled all-in sustaining costs to remain at relatively low levels despite inflationary pressures and higher water purchase costs in Q4. In 2026, the company is guiding gold equivalent ounce production between 50,000 and 60,000 ounces as the heap leach operation stabilizes at higher levels and more ounces come in from the underground this year. We expect that all-in sustaining costs will continue to moderate due to a reduction in water purchases and higher feed grades from the underground.

The all in sustaining costs for the full year came in at 1746 per ounce.

With Q4, all in sustaining costs of $1391 per ounce, which was a result of the higher production in the fourth quarter.

The company continued to focus on operating costs.

Sorry, excuse me the Companys continued focus on operating costs enabled all in sustaining costs to remain at a relatively at relatively low levels, despite inflationary pressures and higher water purchase costs in Q4.

In 2026, the company is getting gold equivalent ounce production.

<unk> 50, and 60000 ounces at the heap Leach operation stabilize at higher levels.

More ounces come in from the underground this year.

We expect that all in sustaining costs will continue to moderate due to a reduction in water purchases and higher fee grades from the underground.

Jason Brooks: Production rates are skewed higher in H2 2026 due to mine sequencing, as more underground ore is expected to be available in H2 of the year. In 2025, driven by stable operating costs and much higher gold prices, the company generated adjusted EBITDA of $46 million for the full year and $22 million in Q4. Going into 2026, Cerrado's production will be unhedged, allowing MDN operations to reap the benefits of the completion of its recent expansionary capital expenditure program to grow production through its new heap leach operations, as well as the availability of additional high-grade ore from underground operations. With the hedging program completed in 2025, Cerrado is now substantially exposed to record gold prices.

Production rates are skewed higher in the second half of 2026 due to mine sequencing.

As more underground ore is expected to be available in the second half of the year.

In 2025, driven by stable operating costs and much higher gold prices. The company generated adjusted EBITDA of $46 million for the full year at $22 million in the fourth quarter.

Going into 2026, cerrado production will be unhedged, allowing MTN operations to reap the benefits of the completion of its recent expansionary capital expenditure program to.

To grow production through its new heap Leach operations as well as the availability of additional high grade ore from underground operations.

But the hedging program completed in 2025, Cerrado is now substantially exposed to record gold prices.

Jason Brooks: Additional investment plan for 2026, including an expanded heap leach pad, a new tailings area, additional fleet enhancements, and ongoing exploration activities, is positioning MDN for long-term success. Finally, the company finished the year with over $22 million in cash. Moving into 2026, given the current gold price environment, the company expects to continue improving its cash position above and beyond capital allocated to project growth plans. With that, I would now like to return the call back to Mark Brennan and take us through some production highlights and outlook for 2026.

Additional investment plan for 2026, including the expanded expanded heap Leach pad are.

A new tailings area.

Additional fleet enhancements.

An ongoing exploration activities is positioning MDA for long term success.

Finally, the company finished the year with over $22 million in cash.

Moving into 2026, given the current gold price environment.

The company expects to continue improving its cash position cash position above and beyond capital allocated to project growth plans.

With that I would now like to turn return the call back to Mark Brendan and take us through some production highlights and outlook for 2026.

Mark Brennan: Thanks, Jason. Turning to slide four. As we progress through 2026, we have a strong exploration program in place. We are targeting a surface exploration program of approximately 50,000 meters that does not include underground exploration. To accomplish this, we have acquired 3 owner-operated rigs. We now have 3 diamond rigs and 1 RC rig turning as we speak, with the initial results continuing to be encouraging. While drilling performance is now on target, we continue to see some delays with assay results. We are in the process of certifying our internal lab to shorten turnaround times and improve exploration performance and targeting. We will be releasing results to the market when we can demonstrate critical mass and new ore bodies. Cerrado's target is to expand the current mine life to at least 6+ years and grow production.

Thanks, Jason I'm, turning to slide four as we progressed through 2026, we have a strong exploration program in place we are targeting a surface exploration program of approximately 50000 meters that does not includes underground exploration to accomplish this we have acquired three owner operated rigs we now have three dime.

Rigs and when RC rigs turning as we speak with the initial results continuing to be encouraging while drilling performance is now on target. We continue to see some delays with assay results. We're in the process of certifying our internal lab to shorten turnaround times and improve exploration performance and targeting we will be <unk>.

Leasing results to the market when we can demonstrate critical mass and new ore bodies. Cerrado is target is to expand the current mine life to lease six plus years and grow production. We also plan to have five fifth drove arriving in August.

Mark Brennan: We also plan to have a fifth drill arriving in August that will focus on exploration at the Paloma underground site, which is open at depth and along strike, where exploration success has the potential to increase grade to the mill and potentially materially boost production rates. As we progress into 2026, our focus remains on ramping up underground production during Q2 and Q3. As water availability returns as we enter the rainy season, heap leach production levels should recover to nameplate capacity and contribute to lower costs. We also have extensive operational optimization programs underway at MDN. As these programs are completed, we expect it will result in reduced unit costs and expanded production capabilities.

That will focus on exploration at the Paloma underground site, which is open at depth and along strike where exploration success has the potential to increase grade to the mill and potentially material materially boost production rates as we progress into 2026, our focus remains on ramping up production underground production.

During the second and third quarters and as water availability returns as we entered the rainy season heap Leach production levels should recover to nameplate capacity and contribute to lower costs.

We are all we also have extensive operational optimization programs underway at MDM.

As these programs are completed we expect to result in reduced unit cost and expanded production capabilities.

Mark Brennan: As previously mentioned, 2025 was a very successful transition year for the company, with significant investments made to advance our projects and set the company up for future mineral resource and production growth at MDN and advance our development projects with optimized feasibility studies and a production decision at Lagoa Salgada in Portugal expected in Q3.

As previously mentioned 2025 was a very successful transition year for the company with significant investments made to advance our progress our projects and set the company up for future of mineral reserves and progression production growth at MDM and advance our development projects with optimized feasibility studies and a production decision at <unk>.

<unk> got in Portugal expected in Q3.

Mark Brennan: As previously announced in early 2026, we are working with various government agencies in Portugal to resolve the current impasse with respect to the granting of the environmental impact approval given that Cerrado received a notice that the Portuguese environmental agency had purported to issue an unfavorable opinion for the Lagoa Salgada project, contrary to what we believe is contrary to applicable laws and regulatory framework. We expect to be in a position to provide greater detail in the coming weeks as to the resolution of this matter.

As previously announced in early 'twenty six.

We are working with various government agencies in Portugal to resolve the current impasse with respect to the granting of the environmental impact approval given the cerrado received a notice that the Portuguese environmental agency had reported to issue an unfavorable opinion.

<unk> got a project contrary to what we believe is contrary to applicable laws and regulatory framework, we expect to be in a position to provide greater detail in the coming weeks as to the resolution of this matter.

Mark Brennan: At Mont Sorcier in Quebec, we are nearing completion of our feasibility study expected by the end of Q2 2026 and the submission of the environmental impact assessment by year-end. In 2026, we completed just under 18,000m of drilling to support upgrading the resources to reserves. As highlighted in Q4, the project is set to be developed into a phase 8 million tons per annum project, producing over 67% high grade, high purity iron ore concentrates in two phases of 4 million tons per annum. This should also lead to a more optimal phasing of capital costs where we are seeing some upward pressure.

Also amongst our share in Quebec, we are nearing completion of our feasibility study expected by the end of Q2 2006, and some of the submission of the environmental impact assessment by year end in 2026, we completed just under 18000 meters of drilling to support upgrading the resources to reserves.

As highlighted in Q4. The project is set to be developed into a phase 8 million ton per annum project producing over 67% high grade high purity R&R concentrates in two phases at 4 million tonnes per annum.

This should also lead to a more optimal phasing of capital costs, where we are seeing some upward pressure the market for high grade iron concentrates remains robust with a significant premiums seen in the market for monster.

Mark Brennan: The market for high grade iron concentrates remains robust, with a significant premium seen in the market for Mont Sorcier's high grade, high purity material, which we anticipate will translate into strong support for the project in the global iron ore market. We continue to see that a strong value proposition for Cerrado remains in place, with significant cash flow growth, and minimal shareholder dilution needed as we advance all three projects targeting higher cash flow and production rates. We continue to believe our shares are trading at a material discount to our peers and to anticipate we can close this gap as we continue to deliver on production, cash flows, and project development. This concludes the presentation portion of the call. I will now turn the call back to Lisa to open the call for the Q&A portion of the call.

High grade high purity material, which we anticipate will translate into strong support for the project in the global iron ore market.

We continue to see that a strong value proposition for cerrado remains in place with significant cash flow growth.

And minimal shareholder dilution needed as we advanced all three projects targeting higher cash flow and production rates. We continue to believe our shares are trading at a material discount to our peers and to anticipate we can close this gap as we continue to deliver on production cap growth cash flows and project development.

This concludes the present portion of the call I will now turn the call back to Lisa to open the call for the Q&A portion of the call.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You will hear that automated message advising your hand is raised. If you would like to remove yourself from the queue, press star one one again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question will be coming from the line of Ron Stewart of Red Cloud Securities. Your line is open.

Thank you.

If you would like to ask a question. Please press star one on your telephone you will hit that automated message advice in your hand as range. If you would like to remove yourself from the queue. Please press star. One again, we also ask that you. Please wait for your name and company to be announced before proceeding with your question one moment, while we compile the Q&A roster.

Our first question will be coming from the line of Rod Stewart of Red Cloud Securities. Your line is open.

Ron Stewart: Good morning, Mark. Good morning, everyone. Congrats on getting the news out. Mark, I might have missed it, but do you have guidance of sustaining capital, development capital, and exploration spending for 2026?

Good morning, Mark Good morning, everyone. Congrats on getting the news out.

Mark I might have missed it but do you have guidance, so sustaining capital development capital and exploration spending for 2006.

Mark Brennan: Yes. We dropped again. Stupid call. I'm sorry, did you get my question? On here. We just dropped. Could you please repeat that question one more time?

We dropped again.

Okay.

I'm sorry did you get my question.

Okay.

Alright.

Well here, we just drop could you briefly could you. Please repeat that question one more time.

Ron Stewart: Yeah, no worries. Do you have guidance on sustaining capital, development capital, and exploration spending for 2026?

Yes, no worries.

Do you have guidance on the sustaining capital development capital and exploration spending for 2006.

Mark Brennan: We'll be using an all-sustaining cost guidance of $1,800 to $2,000 per ounce. Basically, we're targeting 50,000 meters of surface drilling with additional underground drilling. We have ordered an underground rig that should be delivered July, August. It's a very difficult time to find rigs right now that are for underground exploration. We'll have that on site by July, August. We expect-

We will be using an all in sustaining cost guidance.

<unk>.

$102000 per ounce.

Basically.

The.

We were targeting 50000 meters of surface drilling.

With additional underground drilling we have ordered an underground rig that should be delivered July August it's a very difficult time defined rigs right now that are underground exploration.

Have been insight by July August and.

Okay.

Ron Stewart: Uh, and you-

Mark Brennan: We expect that we could see an additional, you know, 10, 20,000 meters of drilling underground.

We expect that we could see an additional 10 to 20000 meters of drilling underground.

Ron Stewart: No, I got that. I was wondering whether or not you provided guidance as to the costing and whether or not the drilling is going to be capitalized or expensed.

No I got that I was wondering whether or not you've provided guidance as to the costing and whether or not the drilling is going to be capitalized or expensed.

Mark Brennan: The drilling for underground will probably be capitalized. In terms of guidance on cost, if you're looking for a guidance, we're probably looking at around, because they're our own rigs, they're probably around $250 a meter, excuse me.

The drilling from underground will probably be capitalized.

And in terms of the guidance of cost.

If youre looking at your guidance and we're probably looking at around because they are our own rig supply were up $250 a ton.

<unk>.

Ron Stewart: Okay. Okay.

Okay.

Okay does that answer your question.

Mark Brennan: Does that answer your question?

And the total development capital the total capital spending that you are anticipating for advancing the project.

Ron Stewart: the total capital spending that you're anticipating for advancing the projects?

Mark Brennan: Oh, excuse me. We're spending approximately $30 million of CapEx at MDN this year.

We're sending 30 approximately $30 million of Capex at the end of this year.

Ron Stewart: Okay. Okay, thank you.

Okay.

Okay. Thank you.

Mark Brennan: Thank you, Ron.

You're right.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Heiko Ihle from H.C. Wainwright & Co. Your line is open.

Thank you one moment for the next question.

Our next question will be coming from the line of Io key highlights from <unk> from H C. Wainwright. Your line is open.

Heiko Ihle: Hey, excuse me. Hey, everybody. It's Heiko Ihle from H.C. Wainwright & Co. Two things. With the water availability at MDN, first of all, what have you seen recently? Second of all, how should we think of this going forward? Is there presumably more variability going forward, or should we really just look at this as getting better with time?

Okay.

Excuse me, Hey, everybody, it's heiko <unk> from H C Wainwright.

Two things with the water availability at <unk>.

<unk>.

First of all what have you seen recently and second of all how should we think of this going forward as they are presumably more.

Variability going forward or should we really just look at this.

<unk> getting better with time.

Mark Brennan: Are you speaking specifically on the second point, Heiko, to the water or in general?

Are you speaking specifically on the second point heiko to the water or in general.

Heiko Ihle: I thought with just the water, but if you wanna answer both, by all means, go ahead.

I thought were just the water, but if you want to answer both by all means go ahead.

Yes.

Mark Brennan: Yeah. I guess for the 2025-2026 summer months in Argentina, we've had a particularly dry season. Combined with that, we also saw one of our water wells had depleted. Our usual capacity requirement is about 45 cubic meters. Basically, with the dry weather that we experienced, we're having to bring in about 60 trucks a day to provide water in order to continue the operations. Now, this had an impact as highlighted on the heap leach irrigation and therefore production. You know, what we're finding now is that we...

Yes, I guess for the for the 'twenty five 'twenty six summer months in Argentina.

We've had.

Particularly dry season.

Combined with that we also saw one of our water wells.

Depleted.

So our usual capacity requirement is at 45 cubic meters.

And <unk>.

Basically we are having to bring in with.

With the dry weather that we experienced we were having to bring in about 60 trucks a day.

To provide water in order to continue the operations now this had an impact as highlighted on.

On the heap Leach.

Irrigation and therefore production.

And.

What we're finding now is that.

Mark Brennan: That was costing us, excuse me, about $850,000 a month for that water. I'm very pleased to say that on the water reservoir perspective, we've actually drilled a borehole that has basically about 30 cubic meters, which fulfills, you know, 70% of our production requirement. On top of that, we're also moving into the rainy season, starting in late April. We're expecting that we're not gonna have the same issue. Our water costs have dropped down to about $250,000 a month from $850,000 a month.

And that was causing excuse me about $850000 a month for that water.

I'm very pleased to say that.

On the water.

Reservoir perspective, we've actually drilled a hole that.

Although that has basically about 30 cubic meters.

Which fulfills 70% of our production requirement.

And then on top of that.

We're also moving into the we're also moving into the rainy season starting in April.

April and so we're expecting that we're not going to have the same issues. So our water cost have dropped down to about 250000, a month from 850000 months, but again this was a fairly unusual and unique.

Mark Brennan: Again, this was a fairly unusual and unique dry summer that we've had that we've experienced. From that regard, you know, we're obviously being very careful with what and looking forward to what's potentially in the fall of 2026. We're hopeful that we won't have a repeat of the dry season that we've experienced. That kind of puts in place the water situation. We are looking at other ways to, you know, we are looking for other water reservoirs that we can tap for all of our water needs.

Dry.

I guess summer that we've had that we've experienced and from that regard.

We're obviously.

Being very careful with what Lou.

Looking forward to two it's potentially in the fall of 2006.

We are hopeful that we won't have a repeat of the dry.

<unk> season that we've experienced.

So that kind of puts in place the water.

Situation and we are looking at other ways. We are looking for other water reservoirs that we can.

We can capture our all of our water needs.

Mark Brennan: As it relates to the project in general, I think what you've seen at the site and, you know, when we mentioned that last year was a transitional year, it really took us away from being, you know, fighting our way through deposits. We've now really come much more into a management of the asset perspective as opposed to continually driving projects that had to contain our continued sustainability. I'm seeing much more efficiencies, much more attention to long-term value add, like increasing our fleets, you know, one, increasing the fleet, two, increasing, you know, the loaders, you know, and then the trucks that are transporting from 30 tons to 45 tons.

And then as it relates to the project in general.

I think what you've seen at the site and we mentioned that last year was a transitional year.

It really took us away from being.

Fighting fighting.

Fighting our way through deposits and we've now really come much more into a management.

Asset perspective as opposed to continually.

Driving projects that had to contain or continue our sustainability.

So I'm seeing much more efficiency is much more attention to long term value add like increasing our fleets.

One increasing the fleet to increasing.

<unk>.

And then the trucks that are transporting from $30 million 30 tons to 45, so we're seeing operational.

Mark Brennan: We're seeing operational advantages that we're implementing now that'll have long-term implications. I fully expect that, you know, we'll continue to see, as H2 rolls on, we'll continue to see lower costs. Again, our objective with our drill program, with our corporate development, is that we will continue to see resource growth and potential for expansion of life of mine and production levels.

Advantages that we are limiting now that will have long term implications.

I fully expect that that will.

Peter <unk> as the second half goes on we'll continue to see lower costs and again, our objective with our drill program with our corporate development is that we will continue to see.

Resource growth and potential for expansion of life of mine.

And production levels.

Heiko Ihle: That was comprehensive. Thank you. I have a feeling the next one's a little bit more touchy-feely. I'm trying to figure out how we should handicap Lagoa. I mean, if you were in my shoes and you know what the analyst community goes through, Mark, how should we handicap this thing, model this thing? If you were in my shoes, what would you do?

Those comprehensive thank you.

<unk>.

Have a feeling the next one's a little bit more touchy feely.

I'm trying to figure out how we should handicap blood golar.

I mean, if you were in my shoes, and you know what the analyst community goes through March.

How should we handicap this thing model this thing.

If you were in my shoes, what would you do.

I would say I would say that the.

Mark Brennan: I would say this. I think that as mentioned in the core of the discussion, you know, we're very confident in our case and that we feel that you know, there's been irregularities in process and timing, and in conclusions that were not regular. We're hopeful, Heiko, that within a period of two months, certainly by the end of the quarter, we'll have a resolution that's satisfactory to all parties.

I think that as mentioned in the quarter of the discussion.

We are.

Very confident in our case.

And we feel that there.

Theres been irregularities and process and timing.

And then inclusions that debt.

We're not.

Regular and so we're hopeful HEICO that within a period of two months certainly by the end of the quarter.

We will we will have.

We're hopeful we'll have a resolution.

That satisfactory to all parties.

Mark Brennan: That's being accommodated with the intervention of the Portuguese government, who are dealing with Lagoa and Cerrado and dealing with APA, the regulatory agency on the other hand. You know, there's negotiations, discussions going on. Again, we're hopeful that there'll be a resolution within the next two, three months. I guess in terms of how do you handicap this? That's a tough one. The reality is that-

And thats been accommodated in.

And being.

The internet with the intervention of the Portuguese government.

Who are dealing with with like OLED serrato in dealing with regulatory agency on the other hand, so so.

There is negotiations discussions going on.

Again, we're hopeful that.

There'll be a resolution.

Within the next two three months.

I guess in terms of how do you handicap this.

It's a tough one and the reality is that.

Heiko Ihle: Sure.

Mark Brennan: You know, what I would perhaps, you know, to a certain extent, I would defer the decision, if you can, till the end of Q2. In the absence that you can't, I mean, I think you determine what, you know, whether you know whether you handicap it, you know, 20% to 80%. 20%, 80%, that really is gonna be on your perspective of risk. What I would say is that, you know, when I look at the valuation for Cerrado right now, forget about Portugal or even Quebec for that matter, we stand on our own in terms of our value proposition with MDN on its own.

What I would perhaps just understand I would defer the decision if you can.

Joe.

Till the end of the second quarter, but in the absence of that you can I mean, I think you've determined what.

Whether you view.

Whether you.

You handicap at 20% to 80, 20%, 80% that really is going to be on your perspective of risks, but what I would say.

Is that when I look at the valuation for surrender rate now forget about Portugal, or even come back to that matter.

We said on our own.

In terms of our value.

Proposition with MTN.

On its own so.

Mark Brennan: I can't imagine or I don't believe that Lagoa is having, you know, should have the impact with respect to the potential that we see for MDN in the coming few months. I wish I could give you something more definitive, but it really is gonna depend on your risk tolerance and how you feel that people should, you know, how people pursue it. I mean, our internal view is that we're still looking to enter into the construction phase in Q1 next year.

I can't.

<unk>.

I don't believe that.

The Goa has.

It.

It should have the impact with respect to the potential that we see for <unk> in the coming few months.

I wish I could give you something more definitive but it really is going to depend on your.

Sure.

With your risk tolerance, and how you feel that people should.

We will pursue it.

Our internal view is that we're still looking to enter into the construction phase.

In the first quarter of next year.

Heiko Ihle: Okay. Fair enough. I will get back to you. Thanks for the two comprehensive answers there, my friend.

Okay.

Fair enough I will get back in queue. Thanks for the comprehensive answer so my friend.

Mark Brennan: Thank you, Heiko. I really appreciate it.

Really appreciate it.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone. One moment for the next question. Our next question will be coming from the line of Colin McClelland of The Northern Miner. Your line is open.

Thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone one moment to the next question.

And our next question will be coming from the line of Colin.

Luckily many of the northern minor your line is open.

Colin McClelland: Good morning. Thanks for taking the question. Most of it's been answered. I was interested about Lagoa. It appears like you guys were blindsided on the water issue. I just wondered what happened there. You were surprised. How come you didn't know there was an issue with it?

Good morning, Thanks for taking the question most of it's been answered.

<unk>.

It appears like you guys were blind sighted on the water issue.

What happened there.

Youre surprised how come you didn't know that there was an issue with it.

Mark Brennan: Well, technically, there wasn't. You know, what's very unique and when we speak of irregularities, in May, we were informed by the APA that their technical evaluation committee said we had the first project in the history of Portugal that had unanimity with its evaluation of seventeen-strong divisions that look after the technical evaluation for APA. That we had unanimity again with all members of the seventeen-strong committee approving the project. Now, at that time, we also were considering looking at leaching our precious metals. So we had a small component of cyanide usage, which the president of APA did not want us to proceed with, which we kind of understood.

Well technically there wasn't.

What's very unique and when we speak of irregularity.

In May we are informed by the output.

The other technical evaluation Committee.

Had the first project in the history of Portugal, unanimity with its evaluation.

Up 17 strong.

Divisions that look after the technical evaluation forever that we had again, we had unanimity with all members of the 17 strong committee approving the project now at that time. We also we're considering looking at leaching our precious metals.

So we had a.

A small component of.

Cyanide usage, which the president of Alpha did not want us to proceed with which we we kind of understand but even at that stage. When it may of last year, we had already moved to flotation.

Mark Brennan: Even at that stage, when in May of last year, we had already moved to flotation and the precious metals and we're not gonna use cyanide anyway. In their second point that they made to us in May was that they wanted us to enhance the protection of the aquifer, but only the aquifer that was being utilized by the local community. In our instance, there's three aquifers. There's one aquifer at, say, 10 meters, which is used for the agricultural community. If there's rain, they use it. If there's no rain, they don't get it. At a depth of 35 meters is the main aquifer that's used by the local community.

We're not going to use cyanide anyway.

And theyre in Theyre in their second point that they made to us in may was that they wanted us to enhance the protection.

Of the aquifer, but only the aquifer that was being utilized by the local by local community and are instances <unk> is one I prefer it say 10 meters, which is used for the agricultural community. If there is rain. They use it there is no right they don't get it.

At a depth of 35 meters is the main aquifer thats used by the local community and then I prefer.

Mark Brennan: That aquifer, you know, is what they asked us in May to continue to protect. The third aquifer, which is actually where we're drawing our water from, is already contaminated by sulfides and acid drainage. That can't be used by the agricultural community. It cannot be used by the local community. We never had any problems or no issues commented to us in May about the deeper aquifer. When they came back with the decision in January, they did not refer to the two upper aquifers. They only referred to the deeper aquifer, which they had never suggested any issues with in the past.

As what they asked us in may to continue to protect.

In.

In the third act referred which is actually where we're drawing our waterfront is already contaminated by.

Bye bye sulfides in asset drainage.

So that can't be used by the agricultural community cannot be used by the local community.

And so we never had any problems or no new issues.

Commented to us in May about the deeper aquifer when they came back with the decision in January.

They did not refer to the two upper aquifers, the only referred to the deeper aquifer, which they which they had never suggested any issues within the past now.

Mark Brennan: Now, I'll mention that I believe that, Colin, we have probably one of the most sophisticated hydrological studies conducted in Portuguese history. The reason for that is that we have an expert in Spain, who's, you know, renowned as one of the leading experts on water resource, mining water resource management. He actually runs the International Mine Water Association. The fact is that we had very comprehensive layout and plans as it relates to all three aquifers. When they gave us the final decision, which related to only the deepest aquifer.

Mentioned that I believe that column that we have probably one of the most sophisticated hydrological studies conducted in <unk> history.

And the reason for that is that we have an expert in Spain.

Yes.

Renowned as one of the leading experts on water resource mining water resource management.

Actually runs the international mining resource water agency.

And the fact is is that we had very comprehensive layout and plans as well.

Rates to all three aquifers.

When they asked us for when they gave us the the final decision.

Related to.

Only the deepest aquifer first of all that was a contravention of permissible.

Mark Brennan: First of all, that was a contravention of permissible, you know, questions allowed under the rule of law. Second of all, they didn't give us an opportunity to respond to their question with respect to the deeper aquifer. Basically, we had our fellow in Spain provided a 120-page response to their question, which again, we feel sufficiently answered any questions that they may have or any issues that they may have. They did not even take the time to review that response before they gave us the negative opinion.

Okay.

Permissible.

Question is allowed under the under the rule of law.

And second of all they didn't give us an opportunity to respond to their to their question with respect to the deeper aquifer and basically.

We had our fellow in Spain provided 120 page response.

To their question.

Which again, we feel sufficiently.

Answered any questions that they may have or any issues that they may have.

They did not even take the time to review that.

That response.

Before they gave us a negative opinion, so it's our strong belief that there had been irregularities.

Mark Brennan: It's our strong belief that there have been irregularities, not only in the timing but also in the process, as well as the technical evaluation of the project. We think that they're quite evident. As a consequence, we're hopeful that we will have a positive forward dialogue with the Portuguese government and the development of Lagoa Salgada moving forward.

Not only in the timing, but also in the process as well as the technical evaluation of the project.

And we think there are quite.

We think that they are quite evident.

And as a consequence, we are hopeful that we will have a positive.

Forward dialogue with the Portuguese government.

And the development of Lavazza got up moving forward.

Colin McClelland: Okay. Just a quick follow-up then. One of the mayors over there seems to be, you know, he's jumping up and down a bit about it. You guys are reaching out, trying to persuade him or talk to him about the issues.

Okay, just a quick follow up and one of the mers over there seems to be.

Jumping up and down a bit about it.

You guys are reached.

Persuade him or talk to him about the issues.

Mark Brennan: Well, you know, what's very interesting is we had a very positive relationship with that mayor up until the last election. You know, obviously, as you can imagine, you know, a mining project in anybody's backyard will arise with high controversy. The funny thing is that with this particular mayor, we had a tremendously strong relationship with him.

What's very interesting is we had a very we had a very positive relationship with that Mayer.

Up until the last election, and obviously as you can as you can imagine.

Our mining project in anybody's backyard is highly conscious move will rise with high controversy.

Funny thing is that with this particular mirror.

We had a tremendously strong relationship with him and.

Mark Brennan: What was interesting is that up until the inauguration date, let's say, which I believe was in September, and let's say it was 15 September, which was a Saturday, there was an official informal inauguration, which we were invited to, which we participated in, which we were, you know, kind of feted, I guess, for lack of a better word. At that Saturday, you know, there was a meeting set up for the following Friday, and at that point, the mayor went dark, and he went on a totally different course than he had had with us. We had a phenomenal. We've had a.

What was interesting is that up until the inauguration date, let's say, which I believe which was in September and let's say it was the 15th of September which was a Saturday.

There was an official and formal inauguration, which we were invited to which we participated in which we were we were.

Kind of.

Got it I guess for lack of a better word.

Then at that Saturday there was.

A meeting set up for the following Friday and at that point the mayor wet winter.

Went dark and he went on it totally.

At different course, any it had with US we had a phenomenal.

Mark Brennan: You know, just so you know, we have had over the course of the past 8 years a phenomenal relationship with the local community, with the federal community, and we have never had any injunctions. We've never had any issues with any of the local community until this mayor frankly had a totally 180-degree change in his perspective, which we don't understand. We're still trying to understand how that perspective came about, and why that perspective came about. You know, we know that there's a real estate community called Comporta that they're developing 2 golf courses and very luxurious homes. You know, perhaps we're an inconvenience to that development.

So just so you know we have had a phenomenal over the course of the past eight years, we've had a phenomenal relationship with local community.

The federal community.

We have never had any injunctions, we've never had any issues with any of the local community until this mirror.

Frankly.

Totally 180.

180 degree change in this perspective.

Which we don't understand we're still trying to understand how that perspective came about.

And why that perspective came about.

We know that there is a real estate community called <unk> that.

That theyre developing two golf courses and very luxurious homes.

And perhaps where an inconvenience to that.

That development.

Mark Brennan: Again, we would say that there are high irregularities in the whole process here.

But again.

We would say that there are high.

Regularities in the whole process here.

Colin McClelland: Right. How far is that luxury development away from you guys?

Alright, how far is that luxury development away from you guys.

Mark Brennan: Well, in terms of distance, it's about 35km. Really, we don't feel it should have any impact, although it is still within the Grândola jurisdiction. Second of all, you know, probably more importantly, is that the project is almost complete as its selling process. Once that sales process is completed, my guess is that people are gonna change their tune on Lagoa fairly considerably.

In terms of the difference is about 35 kilometers. So really we don't feel it should have any impact although it is still within the Grand Villa.

Jurisdiction.

And then second of all most probably more importantly is that the project is almost completed that selling process.

And so once that sales process is completed my guess is that people are going to change their tune on will go up fairly considerably.

Colin McClelland: Great. Thanks very much.

Great. Thanks, very much. Thank you Paul I appreciate the question.

Mark Brennan: Thank you, Colin. Appreciate the question.

Mark Brennan: Thank you. At this time, there are no more questions in the queue, and I'd like to turn the call back over to Mike. Please go ahead, Mike.

Operator: Thank you. At this time, there are no more questions in the queue, and I'd like to turn the call back over to Mike. Please go ahead, Mike.

Thank you and at this time there are no more questions in the queue and I would like to turn the call back over to Mike. Please go ahead.

Mark Brennan: Thank you, operator. We're just gonna check the webcast just to see if there's any questions that have come in through that. We do have a few here. The first one is from Matt Crabbay. He's asking when, if we anticipate any release of the drilling results at MDN. You know, we're proceeding with the drilling, and you know, we've had some very interesting progress there. We have two areas that look highly prospective. We're drilling with the area called Soforo S, which is just east and south of the Paloma underground pit.

Mike McAllister: Thank you, operator. We're just gonna check the webcast just to see if there's any questions that have come in through that. We do have a few here. The first one is from Matt Crabbay. He's asking when, if we anticipate any release of the drilling results at MDN.

Thank you operator, we're just going to check via webcast just to see if theres any questions that have come in through that and we do have a few here.

The first one is from Matt <unk> he is asking when if we.

Dissipate any release of the drilling results at MTN.

We were proceeding with the with the drilling and well.

Mark Brennan: You know, we're proceeding with the drilling, and you know, we've had some very interesting progress there. We have two areas that look highly prospective. We're drilling with the area called Soforo S, which is just east and south of the Paloma underground pit. On top of that, we're also looking at an area in the southern zone called Baritina and Chulengo, which looks very interesting as well. Now, the issue that we have in terms of producing and publishing results is that what we need to do there is to really have a density of drilling that we can actually come out with, you know, what we would consider to be resource-worthy kind of size.

We've had some some.

Interesting.

Progress there we have two areas.

Look highly prospective.

And we have.

Drilling with the area called <unk>, which is just east of the east and south of the.

Of the.

The underground.

Alumina underground pit.

Mark Brennan: On top of that, we're also looking at an area in the southern zone called Baritina and Chulengo, which looks very interesting as well. Now, the issue that we have in terms of producing and publishing results is that what we need to do there is to really have a density of drilling that we can actually come out with, you know, what we would consider to be resource-worthy kind of size. That's really what we're looking to put out. I would say that by mid-year, we'll be able to come out with hopefully some greater progress and discussion on that, certainly before mid-year.

And then on top of that we're also looking at.

In the southern zone.

Albert Tina.

<unk>, which looks very interesting as well now the issue that we have in terms of producing and publishing results is that what we need to do there is to really.

End up with.

Have a density of drilling that we can actually come out with.

Considered to be resource.

What are the kind of size.

Mark Brennan: That's really what we're looking to put out. I would say that by mid-year, we'll be able to come out with hopefully some greater progress and discussion on that, certainly before mid-year. Also, you know, we are looking to be able to, within that timeframe, to also provide evidence to the market that we can expand our life of mine and look to potentially double that life of mine. That's something we're still focusing on in the midterm, short term as well.

And that's really what we're looking to put out so I would say that by by mid year, we'll be able to come out with that.

Hopefully some so greater progress in discussion on that.

Certainly before mid year.

Mark Brennan: Also, you know, we are looking to be able to, within that timeframe, to also provide evidence to the market that we can expand our life of mine and look to potentially double that life of mine. That's something we're still focusing on in the midterm, short term as well.

But also we are looking and we are looking to to be able to within that timeframe.

Also provide evidence to the market that we can we can.

Sure.

Expand our life of mine.

And look to potentially double that life of mine.

And that's something we're still focusing on in the midterm short term as well.

Mike McAllister: We also have one other follow-up call or question from Matt Crabbay regarding the company's buyback. He's asking if the company bought back, and if so, how many shares during the quarter?

And then we also have one other follow up question from Matt regarding the company's buyback he's asking if the company bought back and if so how many shares during the quarter. We bought a total in our buyback of about 380000 shares or just under 400000 shares of a total buyback of $6 4 million.

Mark Brennan: Yeah. We bought a total in our buyback of 380,000 shares or just under 400,000 shares of a total buyback of 6.4 million. You know, our treasury is building up very nicely and, you know, we're buying shares on a daily basis. However, you know, what we're kind of contemplating, we're waiting for is to see if the markets have any significant sell-off and looking at that as potentially an opportunity to come in and buy a larger bulk of shares.

We our treasury is.

Is building up very nicely in.

Where we are.

We're buying shares on a daily basis.

However, what we're kind of contemplating we're waiting for is to see if the markets have any significant sell off in <unk>.

Looking at that as potentially an opportunity to come in and buy larger bulk of shares.

Mark Brennan: I mean, we tend to think that the hostilities in the Middle East are probably gonna continue a little more than people were looking for as of yesterday. Today is a different day. We think that there's still probably some capitulation in the markets and potential for capitulation in the market, and we think we can use that as an opportunity to buy our shares at that time.

We tend to think that the hostilities in the middle East Youre, probably going to continue a little more than people.

We're looking for as of yesterday today, it's a different day.

But we think that theres still probably some capitulation in the markets in.

Potential for capitulation in the market and we think we can use that as an opportunity to buy our shares at that time.

Mike McAllister: Just one follow-up question. Tim Tremblay is asking, will you receive any funding or grants from the Canadian government for the development of the Monte Sossego project?

And then just one follow up question.

He is asking.

In terms of.

<unk> Duffy will you receive any funding or grants from the Canadian government for the development of the Mt Associate project.

Im.

Mark Brennan: I think it's an avenue we could pursue, but as we've really tried to highlight to people, we don't need the money from the Canadian government. One of our, you know, one of our strongest positions here is that we have the support of UKEF, which is the UK Export Credit Agency, and we believe in conjunction with another development agency that we'll be able to fund this project to the tune of about 70%. On top of that, we believe that the other two remaining sources of funding, which would make up the 30%, we believe offtake and potential stream could help us a long way towards completing that.

I think it is an avenue, we could pursue but as we've really tried to highlight to people.

We don't need the money from the Canadian government.

One of our one of our strongest positions here is that we have.

We have the support of you cap, which is the UK export credit agency.

And we believe in conjunction with another development agency.

We will be able to fund this project to the tune of about 70%.

And then on top of that.

We believe that the other two remaining sources of funding.

That should make up the 30% we believe uptake in <unk>.

Potential stream could could help us a long way towards completing that in.

Mark Brennan: Then by 2028, when we anticipate being in construction, we believe we'll have a cash position that can furnish the balance. In terms of our mantra, as you guys are well aware, as per the same response for Portugal, you know, we really believe that there's a strong possibility that we can develop these three projects from our own cash flows as well as through means which are non dilutive, and predominantly through offtaker agreements or potential sale streams. Although we know that the long-term cost of streams. You know, again, we're building a very strong cash position. We're seeing that expand.

Then by 28, when we anticipate being in construction. We believe we will have a cash position that they can furnish the balance.

So in terms of our mantra as you guys are well aware as per the same response for Portugal.

We really believe that there's a strong possibility that we can develop these three projects.

Our own cash flows as well as through means which are non dilutive and predominantly through offtake agreements or potential sale extremes.

Although we know the long term.

Cost of streams.

So.

Mark Brennan: You know, again, we're building a very strong cash position. We're seeing that expand. With Lagoa potentially coming on stream in 2028, that would put us in a position where, you know, if I'm looking at today's market, we're probably generating $200 million of cash flow. We're really building up some momentum here that I think we'll be able to sustain and grow these projects without the requirement for dilution.

But again, we're building a very strong cash position.

<unk> seen that expand with lower potentially coming on stream in 2028.

Mark Brennan: With Lagoa potentially coming on stream in 2028, that would put us in a position where, you know, if I'm looking at today's market, we're probably generating $200 million of cash flow. We're really building up some momentum here that I think we'll be able to sustain and grow these projects without the requirement for dilution.

I would put us in a position where if im looking at today's market, we're probably generating a couple of hundred million dollars.

Cash flow.

So we're really building up some momentum here that I think.

We will be able to sustain and grow these projects with them.

Requirement for dilution.

Mike McAllister: Great. One other one. The company has stated that the production is back-end loaded in the year. How many ounces do you expect will come from the underground in the H2 and, estimate on that grade of those ounces?

Great.

And then one other one the company has stated that the production is back end loaded in the year. How many ounces do you expect will come from the underground in the latter half of the year estimate on that greater those ounces.

Mark Brennan: My guesstimate would be that we're looking at something in the region of about 1,000 ounces a month or so. Now, you know, remember, we published a PEA that basically had a 30,000-ounce resource underground. I believe that, you know, the objective that we have is not to really go underground to produce the existing resources that we have. Really is to go underground and start drilling aggressively to grow the resources. That's what we've seen at our neighbors at Cerro Negro, at Cerro Moro, at Cerro Vanguardia, and at Cerro Negro.

My guesstimate would be that we're looking at something in the region of about.

About 1000 ounces of months or so.

Now remember, we're not going there.

The purpose of the underground development was not to go in.

We have a plan, where we see it we published a peer.

Basically had a that had a 30000 ounce resource underground.

I believe that.

The objective that we have is not to really go underground.

To produce the existing resources that we have really has to go underground and start drilling aggressively to grow the resources and thats, what we have seen that our neighbors at Cerro narrow at Cerro Moro at Cerro Vanguardia Cerro <expletive>.

Mark Brennan: Really underground is where you start to see the rubber hit the road. You know, for the most part on the massif, you tend to see, you know, fairly vein structures that are dispersed, that they're small, but multiple. There are a very large number of them. The fact is that as you move underground, you tend to find vein structures that are more complete and larger. That's what we're anticipating that we'll see. We really need to go down there and drill aggressively, which we'll do as soon as we receive the rig, which will be in July or August.

Really underground is where you start to see the rubber hit the road for the most part.

The massive you tend to see fairly.

Fairly.

Yes.

These being structures that are that are dispersed that theyre small but multiple.

But.

But are very they're very.

A large number of them.

The fact is is that as you move underground you tend to find.

Vein structures that are more complete and larger and.

Mark Brennan: That's what we're anticipating that we'll see. We really need to go down there and drill aggressively, which we'll do as soon as we receive the rig, which will be in July or August. You know, it leads to the question that, you know, with a little bit of success, and our average grade that we're contemplating is about 5 grams in our budget, per 5 grams per ton. When we were mining the Paloma pit above the underground, you know, we're averaging around 7 to 8 grams.

And that's what we're anticipating that we will see but we really need to go down there and drill.

Aggressively which will do as soon as we receive the rig which will be in July or August so.

Mark Brennan: You know, it leads to the question that, you know, with a little bit of success, and our average grade that we're contemplating is about 5 grams in our budget, per 5 grams per ton. When we were mining the Paloma pit above the underground, you know, we're averaging around 7 to 8 grams. I think that, you know, the potential here is that, you know, that we can see with any success with the drilling, with the open pit, with the surface drilling, the underground, you know, we can really see our production expand fairly dramatically, and we have all the infrastructure in place to develop it.

It leads to the question that with a little bit of success.

And our average grade that we're contemplating as about five grams in our budget.

For.

Five grams per tonne.

When we were mining the Paloma pit above the underground.

Youre, averaging around seven to eight grams. So so I think that.

Mark Brennan: I think that, you know, the potential here is that, you know, that we can see with any success with the drilling, with the open pit, with the surface drilling, the underground, you know, we can really see our production expand fairly dramatically, and we have all the infrastructure in place to develop it. It really is just resource management that we need to develop and expand the expansion of the resources, which we're obviously focusing on now for the first time in our history of being at the mine. So we're very optimistic that at some point the shoe will drop. We're just not sure when that'll be.

The potential here is that.

We can see with any <unk>.

Success with the drilling with the with the open pit will be open the surface drilling underground.

We can really see our production.

<unk> fairly dramatically and we have all the infrastructure in place to develop but it really is just resource management that we need to to develop.

Mark Brennan: It really is just resource management that we need to develop and expand the expansion of the resources, which we're obviously focusing on now for the first time in our history of being at the mine. So we're very optimistic that at some point the shoe will drop. We're just not sure when that'll be.

And expand the expansion of the resources, which are obviously focusing on now for the first time in our history of being at the mine.

So we're very optimistic that at some point the shoe will drop.

We're just not sure when that will be.

Mike McAllister: Follow-up question from Stijn Schmidt. He's mentioning that we have mentioned limited dilution multiple times. What dilution do we foresee, or could we do these identified projects with no dilution?

Follow up question from.

Steve mentioned that we have mentioned limited dilution multiple times.

Felicia do we foresee or could we view. These I think these projects with no dilution.

Mark Brennan: My preference would be for no dilution, obviously. You know, one has to consider the variabilities of market conditions. The mining sector, as we all know, is a very volatile space. You know, what we're seeing now, for example, in Portugal, just to give you a little bit of color, on our position with funding of Lagoa Salgada, is basically we have you know again the support of UK Export Finance for 70% project funding. You know, the addition on, let's call it, for example, a $200 million CapEx.

My preference would be for no dilution.

Obviously, but.

One has to consider that variability.

Market conditions, and we the mining sector as we all know is a very volatile.

Space and.

What we're seeing now for example, unfortunately, just to give you a little bit of color on our position with.

With funding of Lacoste Algata is basically.

<unk>.

Again.

That supported the UK export credit agency for 70% project funding.

The additional let's call. It for example, a 200 million capex.

Mark Brennan: If we're looking at $140 million coming from UKEF and Santander Bank who are working with UKEF, basically the $60 million that we require due to the fact that Boliden has acquired Neves-Corvo and the large number of the trading groups, and even Boliden for that matter, are looking for more ore to go into their smelters. We believe that the current dynamic is that we can use traders to actually help us fund the development of the balance of the capital required. You know, I think there's a strong belief that we have that we could fund that project with third-party money.

So if we're looking at $140 million coming from.

From the.

Thank you Catherine and Santander Bank, who we're working with UK.

Basically the $60 million that we require.

Due to the fact that.

<unk> has acquired nervous corvo and the large number of the trading groups and even believe it for that matter are looking for more or to go into their smelters. We believe that the dynamic current dynamic is that we can we can use traders to actually help us fund.

The development of that.

The balance of the capital required.

And so therefore I think there's a strong belief that we have that we could fund that project.

With the third party money, if we need to put in a little bit of capital.

Mark Brennan: If we need to put in a little bit of capital, we'll be more than strong enough in our own cash position to actually supply that capital ourselves. That means we're not contemplating substantial dilution. If we look at a much bigger capital program in Quebec, we believe the same is true. We may have to rely a little bit on the stream if necessary, but we believe through project funding, offtake, and our own cash position, we should be able to cover the majority of the funding required. I can't make the promise we won't dilute, and that's why we don't say we will never dilute. Our hope is that that'll be the ultimate endpoint.

We'll be more than strong enough in our own cash position.

To actually supply that capital.

Ourselves so that means we're not contemplating substantial dilution.

And if we look at a much bigger capital program in Quebec. We believe the same is true we may have to rely a little bit on the stream if necessary, but we believe through project funding uptake in their own cash position, we should be able to cover the majority of the funding required.

So I can't make the promise, we won't dilute and that's why we don't say, we will never dilute, but our hope is that that will be the <unk>.

Ultimate.

Endpoint.

Mike McAllister: Great. Then just one last question regarding recoveries for the heap leaching. They noticed 32% for the year. Is that what we expect going forward, or could we expect increased recoveries from the heap leach?

And then just one last question regarding recoveries for the heap leaching they noticed 32% for the year.

We expect going forward or could we expect the increased recoveries from the heap Leach.

Mark Brennan: I mean, it really depends whether you're producing the sulfides or the oxides. You know, you correctly highlight that we've been producing from the sulfides, and so the recoveries have been a little bit lower than normal, than what we anticipate. I would expect that those recoveries will improve, you know, as we move into other areas. I would expect, you know, for the sulfides, we're probably running 35%, 40% recoveries. For the oxides, we're probably closer to 60%. But obviously, the oxides are probably running lower grade than what we see in the sulfides.

It really depends if whether you're producing the sulfide through the the sulfides or the oxides.

You correctly highlight that we were producing from the sulfides.

These have been a little bit lower than.

And normal.

What we anticipate I would expect that those recoveries will improve.

As we move through the.

Into other areas, but I would expect you know for the sulfides were probably running 35%, 40% recoveries and then for the oxides, we're probably closer to 60%, but obviously the oxides are probably running lower grade than what we see in the sulfides.

Mike McAllister: Great. There's no more questions from the webcast portion of the call. I'll now turn the call back over to Mark Brennan, just for any closing comments.

Greg there's number.

<unk>.

From the webcast portion of the call. So I will now turn the call back over to Mark Brennan just for any closing comments.

Mark Brennan: Well, thank you everyone who joined us today. As a reminder, the recording of this call, along with the presentation, will be available on the company's website at cerradogold.com. For any follow-up questions or concerns, you can find our contact details on our website. You know, and thank you very much for your support, interest, and following the Cerrado story. With that, operator, thank you very much. I think that concludes our call.

Well. Thank you everyone, who joined US today as a reminder, the recording of this call along with the presentation will be available on the Companys website.

At <unk> Dot com.

For any follow up questions or concerns.

You can find our contact details on our website.

And thank you very much for your support interest in <unk>.

Following the <unk> story.

With that.

Operator, Thank you very much I think that concludes our call.

Mark Brennan: Thank you. This just concludes today's program. You may all disconnect.

Operator: Thank you. This just concludes today's program. You may all disconnect.

Thank you. This does conclude today's program you may all disconnect.

Sure.

Okay.

[music].

Q4 2025 Cerrado Gold Inc Earnings Call

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