Thank you for standing by. This is the conference operator. Welcome to the Cerrado Gold 2025 Second Quarter Financial and Operational Results Conference Call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. To give me assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Mike McAllister, Vice President, Investor Relations at Cerrado Gold. Please go ahead.
Thank you, Operator, and good morning, everyone. Turning to page two in the presentation, I'd like to note that today's call does contain forward-looking information that is based on the company's current expectations, estimates, and beliefs. Please review this slide and 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 investor page on the company's website at cerradogold.com. The accompanying press release is also posted on our website and on SEDAR+. Please note that all dollar amounts mentioned on today's call are in U.S. dollars unless otherwise noted. Following management's presentation and remarks, a Q&A will follow.
Joining me on the call today are Mark Brennan, CEO and Chairman, Jason Brooks, CFO, Cliff Hale-Sanders, President, Ed Guimaraes, Executive Vice President, and David Ball, Vice President of Corporate Development. With that, I'd now like to turn the call over to Mark Brennan.
Thank you very much, Mike, and thank you very much, ladies and gentlemen, for joining us for this call. We're undergoing a fairly significant transition, moving away from having a higher debt load and limited growth prospects previously. This 2025 has been a terrific year for turning that around with substantial reduction in debt and really strong growth potential that I'd like to talk to you a little later. But for now, I'll hand over to Jason Brooks to review the Q2.
Thanks, Mark, and good morning, everyone. I'm going to take us through the financial highlights of the first quarter, excuse me, the second quarter of 2025. And I'd like to start with the acquisition of Ascendant Resources. As many of you know, Cerrado completed the acquisition of Ascendant on May 16th by virtue of issuing approximately 27.7 million of its shares to acquire all the remaining issued and outstanding shares of Ascendant. I wanted to start with this acquisition because it did have a material effect on specifically our balance sheet, but also our income statement for the second quarter. Specifically, this acquisition was accounted for as an acquisition of an asset. And so what that means is, as of May 16th, all of the assets and liabilities of our property in Portugal, the Lagoa Salgada property, is now incorporated into our balance sheet.
Now, this is a look-forward transaction, so I think it's important to point out that none of the Ascendant balances are included in the March 31st or the December 31st, 2024 balances. So for comparison purposes on the second quarter balance sheet, there are no Ascendant balances in the December numbers. Moving forward to production, in the second quarter, the company produced 11,437 gold equivalent ounces, or GEO ounces, as compared to 16,255 in Q2. Now, the variance year- over- year is primarily due to the mix of ounces compared to prior years. So in the prior year, we were mining the high-grade Calandrias Norte pit, which had resulted in higher CIL ounces last year as compared to this year. Whereas in the current year, we had a record heap leach production of 7,864 ounces, significantly higher than the 2,400 ounces from the heap leach in the prior year.
We would like to reiterate our full-year guidance of 55,000-60,000 ounces. As we anticipate the underground production from our Argentina operation to significantly contribute to our production in the second half of 2025. In Q2, our adjusted EBITDA, we accomplished adjusted EBITDA of $7.4 million as compared to $15 million in Q2 2024 and $4.8 million in Q1. The decrease in adjusted EBITDA is largely due to the ounce variance that I just spoke about. That led directly to a $5.2 million decrease in revenue compared to prior year. So lower ounces sold in 2024 as compared to 2025, which was mitigated somewhat by the higher realized price of $2,684 that we realized in Q2 versus $2,200 in the prior year.
Now, if we compare to Q1 2025, so the prior quarter, we had a higher adjusted EBITDA, and that's the result of a higher revenue compared to Q1 2025 on a slightly higher realized price and slightly higher ounces sold. Moving to all-in sustaining costs , the company had all-in sustaining costs of $1,779 per ounce versus $1,233 in Q2 2024 and $1,932 per ounce in Q1 of 2025. The increase, again, on a per-unit basis, is again, directly attributed to the ounces sold in the quarter versus last year, so again, the costs were flat year- over- year, almost identical to the prior year, but because of the lower ounces in 2025, the all-ins sustained costs were about $500 an ounce higher than in 2024.
But again, as compared to the first quarter of this year, the first quarter of 2025, we had a decrease in all-in sustaining costs as we had a reduction in costs of about $2.7 million. Moving towards the balance sheet, the company made a concerted effort to repay debt during the year. Year to date, we've repaid approximately $18 million of debt at the Argentina operation, $10 million of which is in the second quarter. Some of the specific items that we repaid, we repaid $9 million of promissory notes in Argentina. We repaid $6 million of the balance towards the sellers, as well as a reduction in payables in Argentina of about $3 million and about a $1 million reduction in long-term debt in Argentina.
Of that $18 million, 10 of it was in the second quarter, specifically a $5 million payment to sellers, which represents the final payment the company's going to make to sellers as we've paid the $47 million throughout the last five years, and that will be the final payment that we need to make to sellers. Additionally, we made a $5 million reduction in promissory notes in Q2. We've also made significant investments into the mine in Argentina, but primarily the projects in both Portugal and in Quebec, the Lagoa Salgada in Portugal and Mont Sorcier in Quebec. Those investments have totaled about $8 million year to date, and some of the areas of that investment at Lagoa include metallurgical testing, which has already started to deliver positive results. Positive results in the stockwork zone, which we're anticipating is going to reduce processing costs.
Of course, working towards our optimized feasibility study, which we anticipate releasing later this year. On the Quebec project of Mont Sorcier, those investments have gone towards detailed metallurgical test work, infill drilling program, ultimately towards producing our bankable feasibility study, which we anticipate early in 2026. Finally, or not finally, second, the next point is cash balance. We had cash balance of about $5.7 million at June. This is obviously a reduction compared to Q1 and January 1st. However, the primary reason for that reduction is for the two reasons I just previously mentioned: the $8 million in debt reduction, as well as the $8 million in capital investments on our projects and our mine in Argentina. As I also mentioned, we fully expect to have increased production in the second half of the year, in particular as the underground production in Argentina ramps up.
We fully expect that we will achieve our 55,000-60,000 ounce guidance for the year. Finally, on cash, we do have two items of optionality on our cash. We have a $13 million receivable on our balance sheet, which is shown as a long-term receivable as of June 30th. Now, that is an accounting value, which is discounted. But we are due a $10 million payment from Hochschild, which is as a result of the sale of our Monte do Carmo asset in November of prior year. That $10 million is expected in July of 2026, so less than 11 months from now, as well as a final $5 million payment from Hochschild, which is due in March of 2027.
Then, finally, on the cash side, we do have a potential $10 million, excuse me, option payment, which we could receive from the sale of the Michelle property also in late 2024. From there, I'll turn it over to Mark.
Thank you, Jason. And again, this has been a very interesting year for us. Again, it's been a transition year, and I think it's really important to note. And why the importance of that is we've been putting ourselves into a position where we can see strong growth moving forward. We've really seen some tremendous developments and change at our MDN operation in Argentina. We've taken our heap leach production from basically 13,000 ounces in 2024. We're expecting around 36,000 ounces this year. And next year, we're targeting north of 50,000 ounces from that operation. So from that regard, we've seen a lot of investment going into crushing in terms of optimizing the facility to drive that operation. We currently have a three-year, just over a three-year mine life on that operation. But the next step now is to really develop resources.
We're developing resources on the heap leach through exploration, through looking at other opportunities, and then we've also started to move underground. As I mentioned, with the heap leach, our target will be for about 55,000 ounces over the course of the next three years, but now we're looking at surface exploration to augment that, and then obviously, as well, looking at underground exploration. Surface exploration, we started in June drilling for a 20,000-meter program. Our expectation is that we'll see results of that by year-end. We may release results in batches as we go forward. However, what our target is, is to really look at seeing, if not the resources themselves, and a very strong possibility to expand our mine life by another two to three years as a consequence of this program. Underground exploration, we have production available for the next year or two.
Our expectation is that the development underground is really not specifically about production. It's really about how we can go underground, explore underground, and really drive the resources there. If you look at our neighbors at Cerro Moro by Pan American, if you look at Cerro Vanguardia to our south, which is Anglo, they've really grown their operations, and they took their operations to the next level through their underground developments, and that's exactly what we're trying to accomplish. We started with three portals in June. Our expectation is that we will see some production of consequence starting in the fourth quarter, and then moving forward, we hope to have a continual production from our underground operations, so for MDN itself, MDN is moving away from being a development asset, even though we're in production, to a more stable and a stable operation.
But we're very, very excited by the prospects of what that operation has moving forward. As Jason mentioned, we also have two growth opportunities and development projects that we're expending quite a bit of money on this year. As a matter of fact, Cerrado, between all three assets, is looking to invest about $40 million this year. So it's a good proportion of capital. Most of that money is being spent at MDN. But we're also spending money at Lagoa. As alluded, we're looking to publish an optimized feasibility study before the end of the year. We're expecting permitting by the end of the year. And from there, we hope to have our construction beginning in Q3 of 2026. This optimized feasibility study will be led by, first of all, significant progress in our metallurgical studies. We've seen improved recoveries, grades, reduction in deleterious elements.
That project for us looks like it's really going to come in with a strong NPV. And as you guys are aware, we have UKEF and Santander who prepared to provide us with project funding for 70% of the project. And so from that perspective, we believe that this project will, one, gain validation, as well as show very strong economics before the end of the year that we can look to grow in 2026. We've also made significant progress at Mont Sorcier in Quebec. We focused again on metallurgical testing and processing. We've decided to look at a project that will now move from a 95% iron ore grade up to about a 97% iron ore grade. This is high- premium, high- value green steel iron ore that the market is in great demand for.
This market is growing about 9% per annum versus the steel market, which is probably growing around 1%-2%, and we're very excited to look at a feasibility study that'll be delivered sometime in around March, April of next year, but that is going very well, and both feasibility studies that we're undertaking are exceeding our expectations, so we're very excited by that as well, and again, one of the major components that we've had with respect to our corporate objectives is financial debt reduction. We've reduced our debt currently by $18 million this year. Prior to the end of the year, that reduction will probably be down to about increased to about a reduction of $30 million.
And it'll leave us with a very, very strong balance sheet where we see basically a balance sheet will have probably approximating $15-20 million in debt that's rolled over, recurring debt, things like payables and royalties, which will always be part of our balance sheet. And then we should have something in the region of $10-15 million in repayable debt. And we're very comfortable that we'll reduce some of that this year and be very comfortable to eliminate that next year if that's our choice because we'll be generating strong cash flow from our operations at MDN. Again, we've made some tremendous investment. We don't expend capital gratuitously. We understand that every dollar we put into investment, we want a multiple of that back.
As I mentioned earlier, our approximate $35-$40 million that we spent this year, we think is going to come back with tremendous dividends as we go forward. By year-end, we're very comfortable that we'll have a cash position in that $15-$20 million mark, leaving us very, very strong for 2026. The nice thing that we will have accomplished is that with Lagoa Salgada and Mont Sorcier, the majority of the capital expenditures programs that we need to expand are in 2025. We'll have a good cash position by year-end anticipated. On top of that, we'll have strong cash flows from the operations. We won't have a lot of CapEx.
We will not have the same level of CapEx as we've had this year unless we really look to expand our underground production scenario or we look to see some additional production coming from our surface exploration success. So I think we've had a very good move in the last nine months in our share value. We internally believe that we still trade at somewhat of a discount to our peers on just the gold production scenario alone. I think by expanding our mine life by year-end, if we can take that north of five to six years, I think that'll change that. And I think we should see a step in our valuation by increasing the mine life in Argentina.
But on top of that, we anticipate we'll see some good value increase as a consequence of bringing in the feasibility study and de-risking Lagoa Salgada, as well as bringing in the feasibility study for Mont Sorcier. So we're very excited for the year ahead. We believe that we should see another great year for shareholder value increases. And we'll have a very strong financial position to accomplish that. That's the end of my presentation. On slide five, you can kind of see just the metrics that we're kind of talking about. But in terms of, I think at this point, we'd be very happy to address any questions that people may have.
To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Once again, if you have a question, please press star then one on your telephone keypad. Since there are no questions, this concludes the question and answer session. I would like to turn the conference back over to Mark Brennan for any closing remarks. Please go ahead.
Thank you to everyone who joined us today. A reminder, the recording of this call along with the presentation will be on the company's website at cerradogold.com. For any follow-up questions, you can find the contact details on the website as well. We are very happy to take any questions or discuss any of the operations that you may have. With that, operator, please thank everyone and let's end the call.
This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.