Good day and welcome to Q3 Investor Summit Virtual. We appreciate your participation in today's virtual event. Up next, we are pleased to introduce Cerrado Gold Incorporated. If you would like to ask a question during the webcast, you may drop them into the chat box button on the left side of your screen. Please type your question into the box and click "Send" to submit it. At this time, it is my pleasure to hand over the session to Cliff Hale- Sanders, President at Cerrado Gold Incorporated, who will lead the presentation. Sir, the floor is yours.
Great, thank you very much, and thank you everyone for attending today. My name is Cliff Hale- Sanders, and I'm President of Cerrado Gold, which I think you'll find is a unique gold and precious metals development story that is different than most that you'll probably hear in the market today. We are in production, and we have two key development assets which we are working to unlock value. With that, I'll jump right into the presentation. What is Cerrado Gold? Today, we are a gold producing company, producing roughly 55,000 oz of gold at our Minera Don Nicolás mine located in Santa Cruz province of Argentina. We expect, based on our 2024 PEA, to be generating $50 million per year of cash flow at $2,100 gold. Obviously, if gold prices remain at current levels, we would expect significantly higher gold production, sorry, cash flows going forward.
We've also commenced a significant exploration program in 2025 to grow our mineral resources to increase the overall mine life, and we've commenced our initial underground operation. Over the medium and longer term, we have two key development assets. Initially, we have the Lagoa Salgada VMS project located in Portugal, which we're completing an updated feasibility study, which should be completed in Q4. We're really looking for a construction decision in the early part of 2026 with good, strong financial backing to bring that project into development. Longer term, on a critical minerals basis, we're developing the Mont Sorcier, a high-grade, 67% DRI iron mine located in northern Quebec, and this is very suitable for the green steel transition we're seeing globally around the world. We'll look to daylight that value and then move that project forward.
We're well-funded to deliver on our current operational plans with cash on hand of about $15 million as of the end of June, subsequent to a prepayment from Hochschild for money that was owed from an asset sale in 2024. Obviously, we're expecting cash to continue to grow, especially with these gold prices going forward, and we still have additional asset sales and potential option payments coming due over the next two years. As we say, unlike many junior companies, we're not here looking for money. We're here looking to daylight the potential value accretion that we see in the story. Looking at the company, what we've done over the past five years since we acquired the mine in 2019, during COVID, obviously, was significantly turn the operating mine around in Argentina. We're now in that steady state production profile of that $55,000 - $60,000 range.
We expect to sustain that for the next several years. As we transition and bring on Lagoa Salgada, we will remain very much a precious metals focused story with roughly 81% of production at spot prices being precious metals and roughly 62% if we were to use feasibility study more conservative numbers. The real value proposition, in our opinion, is unlocking the assets that we see based on the prior feasibility studies. Obviously, in Argentina, we had roughly $100 million of value based on that asset at $2,100 gold. Portugal had an NPV of roughly $150 million, and the Mont Sorcier project, obviously longer term, and a lot of work to be done to unlock that value at an initial NPV of $1.6 billion. We see lots of room to continue to unlock value as we move forward in the coming years.
Looking at it in a slightly different way, you know, we see a company that has a gold production now of roughly 55,000 oz, and on an equivalent basis, you can see by 2030, 2031, that growing to in excess of 330,000 oz of gold, depending on what price you want to use on an equivalent basis. Looking at that from an NPV or a basis, and again, these were done at the feasibility study prices, so not current prices, much more conservative than current prices. We see MDN had, as I said, just over $100 million. You add Lagoa Salgada to $150 million or $250 million, and we see the potential NPV of $1.8 billion as a possibility by 2030.
Again, looking at that slightly different, looking at it from an EBITDA approach, you know, the PEA was suggesting that Minera Don Nicolás would produce about $44 million per annum at $2,100 gold, excuse me, at the EBITDA level. We see an opportunity here over the next, call it, five years to have a company that's generating in the neighborhood of half a billion dollars of annual EBITDA and really supporting a robust valuation and having the ability to use the cash generation from the other assets to fund the bulk of, if not all, the equity required to build the next asset. Again, minimizing dilution for current shareholders to deliver on this growth profile, leapfrogging from each asset to fund the next one. 2025 has been a year of transition for the company. 2024 was a difficult year.
We had to sell one of our assets in Brazil, Monte do Carmo, for $60 million, which has really been funding the strengthening of the balance sheet and also funding the project through to the ongoing development stage. In Argentina, we're focusing on Minera Don Nicolás to target expanding the mine life to around five to six years. Currently, it's about three, and I'll talk about the processes that we're going through there to expand that with our exploration program. Lagoa Salgada, as I said, we're now in that, we're at the point of completing the optimized feasibility study. We'll submit the final environmental permit by the end of the year and expect to be in a construction decision, call it, late Q2 of 2026 and a relatively straightforward construction so that initial production could commence in Q1 of 2028.
That would add roughly $75 million of free cash flow based on the historical feasibility study and prior metal prices, which are very conservative relative to today's prices across the board. Mont Sorcier is a little bit longer term. We expect to complete the feasibility study in Q1, Q2 of 2026, submit the environmental permit application in Q3 of 2026, and then go through the process of getting the project funded and permitted to commence construction by mid 2028 and production, call it, in 2030 if all things go well. Going into the assets a little deeper, in Argentina, we have the Minera Don Nicolás asset, as I mentioned. We have an extensive land package of 330,000 hectares in the Deseado Massif, which is a very prolific gold belt within Argentina.
We have Cerro Vanguardia, Cerro Moro, Cerro Negro, the San José mine in that district. It is very much a well-known area, but we have, without question, the largest land package outside of the government. We're currently producing, as mentioned, 55,000 oz per year. We currently have a mine plan out to 2028 with our current resources, which are focused on both heap leaching and traditional CIL milling process. Exploration is really only just recently commenced at that site. The first couple of years were restricted due to COVID and limitations on personnel, and then 2023 and 2024 were just limited capital available for significant exploration. That is now ongoing with a 20,000-meters drill program having commenced. We have also commenced our first underground development in Q2, and we expect that to start contributing to production in a meaningful way in Q4 of this year.
That really is, yes, adding to production is more about future exploration underground, which is what we see at all the neighboring mines in the district. They have all transitioned from open pits to underground to heap leach. We are not trying to reinvent the wheel here or say we are going to be better miners than anyone else, but we see a pathway to continue to grow the resource through exploration. As we have seen at all the mines in the district, once they have gone through a period of exploration, they have tended to be successful. As I said, they have transitioned from just your normal open pit operation to heap leach and underground as well. We are trying to continue to follow the path that the other mines have done. Highlighting the improvement, what we have seen in the operation itself.
As I said, first year does not really count because that was COVID and very much impacted by that operation. The team itself has repositioned the mine from a very underperforming asset now to producing on a steady state around that 55,000 oz level for this year and last year. We expect to continue on that basis. If we look at some of the other companies listed in the market, we only have a 55,000 oz producer. They have a significantly higher market valuation than we do currently. I think now we are getting out there, we are exposing the story. We will continue to see more attention brought forward as we continue to deliver on that production profile.
On a cost basis, we are very much in line with the other mines in the group and in the district, very much a fixed cost kind of operation that is a remote site. It is very competitive in the district, and we expect to be able to keep cost in that $1,500 - $1,700 range once we are at full production. Looking back on the current production profile, we currently are using a mine plan that goes out for, it was five years, but that was done last year. We are now down to about three, three and a half years. That is focused primarily on heap leach as we continue to use that time to focus on exploration to grow the company longer term and expand the mine life. That was done, as I said, at $2,100 gold, obviously producing 55,000 oz a year.
Every $100 is roughly, you know, $5 million a year in additional cash flow. You can do the math yourself, depending on your number that you want to use. Clearly, at today's rates, the mine's value is significantly higher than what we generated back in 2024. On the exploration side, the focus had been initially on the near-term operations to expand the existing pits at Paloma, as we'll show in a second. We're going underground, which is underneath the existing pit that was there, and use that as further exploration. Obviously, with the large land package, we have multiple targets to continue to follow up on. Our first underground effort will be at Paloma. This is underneath the previous high-grade open pit, which has now been mined out based on the pit design. We ended in ore.
We know the ore is there, but unfortunately, due to the physical constraints on surface, we're unable to drill effectively where we want to go. We will be going underground. We're currently developing the access portals, and that'll be contributing to production in Q4 and throughout 2026. We'll use that to further define the underground, as it is much easier to follow the vein from underground than you can from surface. There's very little surface expression in this area. It's very much a gravel desert. This will be our first effort there. We are continuing to look around the district, around the Paloma area for continuation of that high-grade vein. This was an exceptionally high-grade pit for us in the past, typically running 5-8 g per ton. We're looking for the extensions of that vein, both north and south, and in an area called Paula Andrea.
Today we've had, you know, we're just really getting going on that program, and we'll expect to have results over the course of the coming months. When we're looking at it, you know, why are we looking there? As I said, Sulfuro was the highest grade deposit, but some of the historical intercepts highlight there is more high-grade material in the district. We're looking to follow up at the Sulfuro East vein, where we saw historical drilling of 3 m at just under 6 g and some very high-grade intercepts within those as well. We're really just looking to bulk up sufficient resources to justify further development. When you look at the entire district, it's not just one area that we have to look at. We obviously have Paloma, where we're looking at both underground and potential additional open pits.
We have an area called Paula Andrea, where we did some minor mining in 2023 and 2024 at areas called Baritina and Chulengo. These were very high-grade fingers that came to surface, but due to restrictions, we never had the opportunity to drill underneath. We did have one intercept, which was 12 m, about 122 g. We need to follow up there and continue to define that resource and see what potential is there. On the larger land package side, we've got the opportunity in areas such as Chispas, which is along strike from the Cerro Moro mine, which is owned by Pan American and their NADI discovery. We have 3 km of structure on our land package as well, which is underexplored. This just highlights that within 330,000 ha, we have plenty of room to continue to explore and continue to add growth to the assets.
While on paper, the current mine life is relatively short, we'd like that to be longer. We expect that to grow substantially once we continue on with these drill programs. Obviously, success will bring more drilling. Thank you. Going to the next slide. Now looking in Europe at the Lagoa Salgada VMS project, we have 80% interest in this project. It has completed a feasibility study in 2024, which we're now working to enhance. We're looking at a significantly better metal price environment. We're looking at substantially improved metallurgical test work. We expect to be able to bring this project online with very limited, if any, required equity dilution, given we have strong backing support from the U.K. Export Credit Agency and Santander Bank to fund 70% of the upfront capital cost.
When you look back at the prior feasibility study, we were going to be a very low-cost operating mine, roughly $0.79 per pound on a zinc equivalent basis, but 42% of the value is locked in the precious metals. It would be generating EBITDA of $75 million per year for the first five years. I think with the optimized feasibility study, we'll start to see enhanced numbers across the board, whether it's EBITDA, slightly lower CapEx, and improved overall valuation as we go forward. We also expect to see a modest increase in the resources due to the higher prices that are currently being used. As we go through the next few months, the project will complete the upgraded feasibility study around Q4.
We'll be submitting the last of our environmental permit requirements in Q4 as well, and we expect that permit to be granted around year-end, maybe slide into Q1 due to the holiday season. In Portugal, they have a period called the RECAPE, which really is fine-tuning the actual construction, the detailed engineering. At the same time, in the background, we are continuing project financing discussions with the U.K. Export Credit Agency and Santander Bank to fund the initial development costs related to that asset. We expect that to be in a position to close sometime in Q2 and start construction at the beginning of Q3. It's a relatively straightforward build, and it'll take about 18-2 4 months. Initial production will be in Q1 of 2028.
The optimization strategy really is just to enhance the overall value proposition that we saw in the asset when we brought the Lagoa Salgada project into Cerrado . These various areas, be it metallurgy, resources, initial capital, process design, really it's just an opportunity to get a more defined and optimized feasibility study relative to the prior one, which was completed on a time-restricted basis as opposed to perhaps having the best scenarios involved. The key things that we've seen in this phase have been significantly improved metallurgy in terms of overall metal recovery and the quality of the concentrates being produced, making it much more attractive in the market to potential off-takers. Obviously, the initial capital requirements we expect to be relatively similar, but the higher metallurgy and valuations will provide a significantly improved NPV. We're also going to look at the sizing of the overall operation.
The initial feasibility study was done at 1.2 million tons. Maybe it should be 1.4 million tons, 1.5 million tons. We'll have to see as we go through the off-take and trade-off studies. One of the things we do like significantly about this project is looking at other projects in the district, such as the Neves Corvo mine or the Acosta Nidez mine, both of which were sold in the last couple of years for in excess of $1.5 billion. They've been in operation for in excess of 20 years and have had the potential to undergo significant exploration, something that at Lagoa Salgada, outside of defining the north and south zones, there was insufficient capital to really look at exploration at depth. You look at Neves Corvo, they're down to 1,800 m. We're only down to the 300-m mark at Acosta Nidez.
They've continued to expand that ore body by finding additional pods of VMS material and have grown that from roughly a 3 million ton per year, sorry, a 3,000 ton per day operation to a 13,000 ton per day operation. We believe over time there's significant room to continue to add on the discovery side of expanding this asset and growing the mine through future expansions. Longer term, the Mont Sorcier project is really an opportunity to utilize existing infrastructure and develop a new high-grade iron ore mine just outside of the town of Chibougamau in northern Quebec. There's over 370 km of existing railway from Chibougamau to the port of Saguenay in place, and the port of Saguenay is an ocean-going port owned by the federal government, currently undergoing significant upgrades in the hope of opening up the northern corridor for additional exploration and resource development.
Currently, they do not have a material customer. The feasibility study has now commenced. We're doing infill drilling to upgrade the resource to really improve on the 2022 preliminary economic assessment that was completed. Since then, we've improved the quality of the product that we were producing from a 65% - 67% grade material, which, as I mentioned before, is very much the attractiveness for the green steel transition we're seeing around the world to significantly reduce emissions from the steelmaking process. You see significant premiums in the price that is offered for that product. The PEA itself, the 65% material, was still generating $350 million of EBITDA at a free cash flow of $235 million over a 21-year mine life. That was only using roughly 25% of the current known resource.
We believe this project has the potential to be expanded multiple times over its mine life and continue to add additional value as we go forward. Where's the presentation go?
Thank you so much, Cliff. If anyone has questions, please feel free to type your questions into the Q&A box, and Cliff will address them now.
Just reading the questions here, you know, asking about indication of mineralization underground. We have substantial indication of mineralization underground at this time. We just have to drill it off in the sense of bringing it into a package that is economic and resourceful and worth extracting. Yes, we can now, the capital controls in Argentina are significantly restricted, so it's much easier to move cash out of the country and utilize it for other projects as we go forward. Back in 2023, that might not have been the case, but as of 2025, all profits, once audited, can be extracted from the country. Just reading a few of the other questions. Do you have any issues with permitting in Portugal? No, it's going through the permitting process. There's always to-ing and fro-ing as with any project anywhere around the world. We do receive significant local support for the project.
It's in a relatively poor region going forward. I don't see any other issues on that one outside of the time it needs. Question about, as we ramp up production in Q3 and Q4, the all-in sustaining cost per ounce is expected to decline. It is a very fixed cost mine. It's quite remote. As you produce more ounces, you'll significantly reduce the overall all-in sustaining cost per ounce produced because the actual cash cost at the mine, in terms of millions of dollars, won't change dramatically. The new feasibility study for Lagoa Salgada should be out in the latter part of Q4 with all the economics at that point in time. Question about, will we receive any money from the government for Mont Sorcier? We're not looking for any money from the government at this point. We think we can fund that project by ourselves.
I think in the longer term, that's an optionality. We'll see what the market desires in the future. We want to unlock the value that we see in that asset as we go forward and sort of daylight it to the market so that, you know, right now we don't think the market's giving us any credit. Unless there's any more questions, there was a few slides that I don't know got dropped off somewhere in the presentation that really just wrapped up some of the value propositions at Mont Sorcier. Really to highlight, that is not an exploration play. We have defined 1.2 billion tons of resources currently, and as part of the feasibility study, we're just upgrading sufficient to the proven and probable category. We think that's a very robust project going forward, whether it's us that builds it, joint ventures it, or sells it.
We really just want to unlock the value and demonstrate that value proposition and continue to move it along at the goalpost. The other thing that didn't get shown was the use of the Export Credit Agency funding package. The U.K. is, well, all Export Credit Agency's job is to support their domestic exports. What they're looking at is to provide a lower cost of financing. They support banks where we source the necessary supplies to build the mine from U.K. companies and then use them as imported products. Really, the point for Cerrado Gold over the course of the remaining part of this year and 2026 is to continue to unlock the value we see in our three different assets by maintaining steady state production in Argentina and from continuing to grow and develop Lagoa Salgada and Mont Sorcier to unlock that value for shareholders.
I don't see any more questions at this time.
All right, thank you so much, Cliff. This is the end of Cliff's session. Thank you to everyone joining here today.
Thank you.
That concludes Cerrado Gold Incorporated's presentation. You may now disconnect. For details on upcoming presentations, please refer to the conference agenda. Thank you for your participation, and we look forward to welcoming you to the next session.