Welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you've joined us for the second day of our Precious Metals and Critical Minerals Conference. The next presentation is from Cerrado Gold. Please note you may submit questions for the presenter in the box to the left of the slides. You can also view a company's availability for one-on-one meetings by clicking Book a Meeting. At this point, I am very pleased to welcome Cliff Hale-Sanders, President of Cerrado Gold, which trades on the OTCQX Best Market under the symbol CRDOF and on TSXV under the symbol CERT. Welcome back, Cliff.
Great. Thank you very much, Lily. Thanks everyone for attending this afternoon. I hope to present a slightly different, emerging gold story than you probably heard from other presenters and elsewhere. Cerrado Gold is uniquely positioned as a gold producer with significant development projects to come and continue the growth profile over time. We're in a position, obviously, with current gold prices to be driving substantial cash flows, which will limit dilution as we go forward, to build what we see as the opportunity for a significant entity over the coming years. With that, I'll jump into the presentation. To summarize, and then we'll go into more detail, what is Cerrado Gold today? Today, we're a steady-state gold producer.
We've been producing around 50,000 oz for the last several years. We expect to be in the 50,000-60,000 oz range for the next several years based on our current resources. As we'll discuss, we're looking at extending that through exploration. Based on the last 43-101 report published in the market back in 2024, we were expecting CAD 25 million a year of free cash flow from our mining operation in Argentina, sorry, at CAD 2,100 gold. Obviously, at CAD 4,500 gold or higher, that number is expected to be materially higher, as shown by our Q4 EBITDA of in excess of CAD 30 million for the single quarter. We have accelerated exploration at our site in Argentina, named Minera Don Nicolás. We're currently doing a 50,000 m program. We'll highlight some of the details as we go forward.
We've also started our initial underground production scenario. Really, that's gonna be also an exploration platform as we go forward. Right now, the gold is the cash that is generating the machine. Going beyond that, we're looking at developing two quality assets as we move forward. First, in Portugal, we have the Lagoa Salgada project, where we're hoping to be in a position to make a construction decision in the second half of this year. This is a low-cost VMS deposit, which has copper, gold, silver, zinc, and lead as its products and will be very well-positioned to be a critical minerals type asset within Europe. Over the longer term, we're developing the Mont Sorcier iron project in northern Quebec.
This is the position to be a green steel transition opportunity, producing iron ore concentrates in excess of 6%-7% grade iron, which is the desired product in the market going forward. We previously completed a PEA on this asset in 2022 and had an NPV of in excess of CAD 1.6 billion at that time. How are we gonna deliver on that growth for shareholders? Well, one, we're cashed up currently. We have, at the end of the year, just under CAD 23 million in cash. Obviously, at these gold prices, we'd expect to continue solid cash generation, and we still have some outstanding cash to be delivered from previous asset sales and options that have been sold.
We believe we're very well-funded to build on our current production base through the other assets, utilizing our cash generation while minimizing dilution for shareholders and maximizing long-term value. Now, what have we done recently? We acquired the mine back in 2019 during, just as COVID hit, went through a significant turnaround period in Argentina, and as I said, for the past four years, we've successfully produced in excess of 50,000 oz of gold per year. Really a focus from the operational team more than anything else. We have our 2026 guidance is 50,000-60,000 oz. As you may have seen, we've already published our Q1 production, which was just under 13,000 oz for the quarter.
Q1 was expected to be one of our weaker quarters just due to mine sequencing and some other issues, therefore, we're very comfortable we'll probably be at the upper end of our production guidance range as we go forward. When you look at the value proposition, obviously everyone has their own opinion, our Argentinian asset based on our published 43-101 report was expected to generate CAD 25 million in cash. I think you can very quickly do the math. If you're producing 50,000 oz of gold and the gold price is, you know, CAD 2,500 higher, you can do the math on what sort of cash flow we may be able to generate out of Argentina. Portugal had an NPV of $146 million, Quebec had an NPV of CAD 1.6 billion.
The opportunity here is to crystallize and translate some of the asset values that we see going forward into current share prices. A couple of ways to look at this growth progression as we move forward over the next, call it, four to five years. If we're currently a 55,000 oz producer, on a gold equivalent basis, we see a pathway to well in excess of 325,000 oz of gold equivalent by bringing the various projects online. What we aim to do is use the projects as building blocks to grow the company. Currently, MDN, based on the prior study, had an NPV of CAD 111 million and EBITDA annually of CAD 44 million, obviously much higher at today's gold prices.
Portugal had an additional NPV of CAD 149 million and EBITDA of CAD 75 million. Going forward, Mont Sorcier could, based on the PEA, and I'll talk about some of the differences we'll have going forward, add another CAD 1.6 billion to that and almost bring the company to just shy of $500 billion in EBITDA in a relatively short period of time for a mining story. We're talking 2030, 2031 to deliver on that. Obviously, to get to that, there's a lot of work that has to be done and transition the company over the next, call it, four to five years. At Minera Don Nicolás in Argentina, a few focus factors for us, obviously maintaining production at its current run rate, significant exploration, which is currently underway.
We know we hear from a lot of investors, you know, mine life is relatively short. We'd like to see that a little bit longer to give us more confidence, more credence, and we're aiming to exit the year with a minimum of five to six years of mine life. Positions us in line with other single asset producing 50,000 oz producers whose market caps typically are at least twice ours currently, if not much higher. Lagoa Salgada, you may have seen recently, we've run into some issues on getting our environmental permit. We're currently working with the authorities in Portugal as we believe we have effectively been given approval, but there's various groups that believe we have not. We're working with the agencies to move that forward.
We expect to be in a construction-ready decision by Q3, all things going well, and it's a relatively quick construction period, about 18 months. We have good, strong financial support for that as I'll outline later, and that could add in excess of CAD 75 million of annual free cash flow. Longer term, providing optionality for investors is bringing Mont Sorcier to a construction-ready decision and really de-risking the project either for ourselves or potential partners, acquirers as we move forward. Obviously, we expect to deliver a bankable feasibility study by the end of Q2 2026, so within the next two months, submit our environmental application by the end of the year. We expect that environmental application to take somewhere in the order of 18 months.
We'd be in a position to make a project financing decision in the, call it the first half of 2028 if everything goes well. We have export credit agency-backed financing for this project despite its early stage. We believe we can be in production in the early part of 2030, all things going according to plan, adding an additional CAD 235 million or higher in free cash flow, as I'll outline some of the changes that we have done for this asset. Excuse me. Going into a little bit more detail on Minera Don Nicolás, specifically as our core cash generating asset today. It's located in the Santa Cruz province of Argentina, really the gold belt of the district.
You've got Cerro Negro or Newmont, Cerro Vanguardia, AngloGold, Cerro Moro from Pan American. We have the largest land package in the district with 330,000 hectares. To be honest, this project is still very much in its infancy in terms of really daylightening the potential value in this asset. When we acquired it just before COVID hit, previous exploration had been limited. The company that owned it before were only comfortable with open pit. We have now transitioned this mine to a CIL heap leach and an underground operation as we go forward. We still have significant room for exploration. One of the things that was restricted throughout COVID obviously was exploration, then obviously with lower gold prices was capital.
This year, obviously, as I highlighted, we're really embarking on the first, I would say, real greenfield material exploration program as this property has seen over the last several years. The short term, again, is maintaining our production profile as we go forward and looking to grow that resource through new targets, both near mine and on the district. Just a few highlights of the asset itself. As I said, we've transitioned from a very weak performing asset, really owned by a group of companies potentially that should not have been in the mining business per se, and were in it for more politically driven reasons. We have since turned the mine around. It's a very steady producer, roughly in excess of 50,000 oz. We have added heap leach production to our portfolio of infrastructure, and we've also moved underground.
Within the belt, we are well-positioned from a cash all-in sustaining cost basis, despite being one of the smaller producers in the district. We obviously see lots of room to grow production and mine life through exploration. While I say that, everyone says, "Well, that sounds nice." Has it been done before? In the district, we see many instances of starting at a relatively modest resource level, and over a period of time, and if you look at Cerro Vanguardia or Cerro Negro, they've had well in excess of, you know, 15-20 years to grow that resource base, whereas we're just starting. Not saying we'll replicate that same order of magnitude going from, you know, 1 million oz to 6+ million oz that we've seen elsewhere, but we see the potential to grow significantly over time.
The other thing we've seen is we're not rewriting the book in terms of what type of mining takes place at, in the Santa Cruz province. We have added underground, we have added heap leach. Again, if you look at Cerro Vanguardia, Cerro Moro, and Cerro Negro, they have done the same as we are now currently doing. We believe we're following the same pathway that many of these other mines have done. We're just in a position of starting a little bit later, and over time, we expect to replicate a lot of this.
When you look at the assets we have in place, we have all the infrastructure required to produce whatever type of gold deposit we discover, whether it's more material for the heap leach or more high-grade material for the CIL plant, and we are well-positioned to fully utilize those facilities. In the north, we have what we call the Las Calandrias Heap Leach Project, and also the Paloma Underground Project, which is the high-grade material that is right below the existing pit. We know we're in mineralization, we just need to continue to grow and expand that mineralization. What we're doing currently is bringing that high-grade material down to the plant and blending it with some low-grade stockpiles to support production. When you're looking at exploration, as I said, we have significant 330,000 hectare position.
Right now we're focused on the high-grade area near what we call Paloma and Las Calandrias, where the focus of our operations are currently and historically the high-grade success has been. We have about a 10 km strike length of material that we are focusing in on in our first pass exploration currently, such as the Sulfuro East vein, which is the same vein that was in Paloma, the Paula Andrea system, where we've seen exceptional high-grade intercepts in the past, but weren't in a position to follow up and crystallize on exactly what those potential existed. Switching gears a little bit, just in the interest of time, to the Lagoa Salgada project in Portugal. It's on the Iberian Pyrite Belt, so a very well-established mining district. You have mines there like Aguas Teñidas, Neves-Corvo, Aljustrel on the polymetallic side.
On the more traditional side, you've got Las Cruces, which is First Quantum, and the Riotinto mine, which is Atalaya. This is a very well-established belt, very much mining-focused, and we believe Lagoa Salgada has all the hallmarks to be the next mine on the belt. We're fully funded to a construction decision through the process of 2026. We have strong support from the U.K. Export Finance and Santander Bank for up to 70% of the upfront capital needed to build this mine. We see strong support in the offtake market for additional financing, meaning the equity component will be easily managed from Cerrado's balance sheet based on current gold prices.
When you look at the prior study that was completed in 2023, the project was supposed to be generating an NPV of CAD 147 million and a 39% IRR. Obviously, some of the metal prices in that study were significantly lower than they were today. At current metal prices, this mine would still be about 40%-45% precious metals, making Cerrado Gold still about 65% precious metals focused even with this mine coming on. The mine was exposed to be in the first five years at a minimum, exceptionally low grade as we move forward. We expect to complete an optimized feasibility study and address the permitting situation in Portugal over the next several months. As I said, at current prices, Lagoa Salgada is still very much a precious metals commodity.
The other commodities also make it very attractive to Europe and the European Union, which, as we see elsewhere in the world, there is a focus on demonstrating domestic production capacity, especially for critical minerals such as copper, tin, zinc, and lead to a lesser degree. We already have a significant resource in place. We have, in the proven and probable categories, just under 15 million tons, which was the focus of the feasibility study. An additional just under 19 million tons in the measured and indicated and inferred material. We could quickly upgrade the size and scope of this resource with a little bit more drilling. As I said, this project is still, in our opinion, in its infancy of what it could be over the next decade. Why do I say that?
When we look at our neighboring mines, such as Aguas Teñidas, which was acquired by Sandfire for $1.8 billion, or Neves-Corvo, which was acquired by Boliden for roughly the same price over the last two years, we see mines that have evolved over time from near surface deposits to multiple pods. VMS deposits typically are not 1 homogeneous block, but more of a series of pods of high-grade material. To date, at Lagoa, we've only had the opportunity to outline two. We're also very shallow relative to the depths of both Sandfire and Aguas Teñidas. When we look at the geophysics data that we do have, we see lots of potential to go deeper below our existing deposits, but also a long strike of about 8 km of known geophysical anomaly to follow up on.
At Mont Sorcier, this is a long-term, sorry, longer-term option for shareholders today. What we have here is an exceptional opportunity to leverage off existing infrastructure, which for bulk commodities such as iron ore is key. The mine is located about 11 km east of the town of Chibougamau in the James Bay region of northern Quebec. There is 300 km of rail in place from the town of Chibougamau to the port of Saguenay on the Saguenay River, which is a 365 day per year access port. It's not landlocked at all, providing access to the global markets consistently. Both of these key infrastructure routes are significantly underutilized. The rail was put in place for the logging industry. The port today is significantly underutilized.
The government of both Quebec and Canada are trying to incentivize corporations to use the port by investing roughly CAD 200 million currently to upgrade the port facilities. As I said, we've already completed a PEA on this project back in 2022, which outlined tremendous economics of about CAD 1.6 billion NPV and roughly CAD 575 million upfront capital at that time. Now, under the original production scenario, we were looking at 5 million tons of concentrate production per year at a 65% grade material.
Since then, we've been able to upgrade the product specifications to in excess of 67% grade iron ore concentrate. Positioning it for the high-grade, high-purity direct reduction iron market, which is key to the so-called green steel transition that we're seeing the global steel market trying to address by reducing their overall emissions by inputting higher grade materials such as Mont Sorcier. Magnetite material requires less coal in the process. We've also changed the production scenario to an 8 million ton per year scenario built in two phases four plus four . We're doing that really to address some capital cost inflation that we're seeing globally, also just to more formally utilize the resource that's in place as we go forward.
Under the PEA scenario, you know, EBITDA was expected to be about $350 million, $235 million in free cash flow over a 21-year mine life. We're in an excellent position as we move forward to complete the feasibility study as we're currently doing. We expect that to be done by the end of Q2 in terms of at least day-lighting the results to the market. Again, despite the early stage of this asset, given the high quality and the environmental mandate that many of the banks have as well in their portfolio, we're seeing strong construction financing support again for up to 70% of the upfront capital needs from the U.K. Export Credit Agency and TD Bank.
Again, this project, as we continue to de-risk it, and I would say in the market today, we're really getting very minimal, if any value for this asset. As we continue to move the project forward, I think we continue to see the opportunity for significant de-risking and value addition to the share price. As I said, this is not an exploration play. We have 1.2 billion tons already defined in the indicated and inferred category. The PEA was developed solely on indicated material, so from a development scenario standpoint, in our opinion, this is a relatively low risk asset as opposed to pure development. For us, this is more about de-risking a high quality, large capital asset as we go forward.
We're not adverse to bringing in other players, we think with the other assets we have in our portfolio, we have the opportunity here to unlock this value for Cerrado shareholders. Just looking at how we're well-funded to deliver on that. Obviously, we believe we're well-funded at the end of 2025 with CAD 23 million in cash that continues to grow at current metal prices. Cash flow expected through 2026, 2027, and 2028 based on just our current gold production is expected to be robust. We still have CAD 15 million of additional payments, CAD 5 million guaranteed from the sale of an asset back in 2024, and CAD 10 million due from an option that we expect to be exercised most likely in 2027 or 2028. Again, when you look at the team, the team has done this before.
They have developed assets from nascent exploration development stories or and turnaround stories. As a group, you know, Desert Sun, they bought the Jacobina mine and repositioned that mine such that within the period of four years, they were able to buy it for next to nothing, restart it, reopen it, sell it to Yamana for about CAD 600 million. The team also developed the Largo Resources, Vanadium mine in Brazil from very early stage exploration all the way through to production and at a high market cap of CAD 2.5 billion at that time. We also repositioned the Sierra Metals story, went from market cap of CAD 200 million to in excess of CAD 600 million before we created Cerrado Gold and other vehicles as a group.
I would say we have been able to bring together a team that has done it on the gold side, the precious metals and critical metal side, but also on the bulk commodity side, where we've been able to attract some very robust individuals to move these projects forward. Looking at us from a capital structure, relatively straightforward, about 135 million shares outstanding, 151 million fully diluted. Management owns in excess of 11%, very aligned with shareholders to unlock this value as we move forward. At this point, I would say friends and family, we're probably closer to 15, if in excess of 15%. Very well-positioned as we go forward.
Just to summarize, you know, what is Cerrado Gold today? As I said, we're a steady state gold producer of 50,000-60,000 oz for the next several years. I believe if you looked at us relative to other 50,000 oz producers, forgetting other option assets that for the future were significantly undervalued just on our gold production and our exploration opportunities at our Minera Don Nicolás assets in Argentina. In addition to that, we're bringing forward Lagoa Salgada in Portugal as we look to unlock that asset in the second half of this year and really bring it to a construction decision and daylight the optimized feasibility study.
We believe that will be additional value creation to the Cerrado Gold story, maintaining a precious metals exposure while continuing to grow the story, needing very little additional capital that can't be provided internally. Longer term, Mont Sorcier, we think as we continue to move that project forward, we'll continue to unlock the value as we see over the longer term to deliver what we believe will be the next iron ore asset in Canada. To do that, we're well cashed up. We're not looking to go out and raise money every year to continue to move projects forward. We expect the cash generation in 2026 to continue to be very strong. Obviously, these gold prices continue.
We believe because of that and the stepping stone approach that we have to deliver these assets, we believe we're well-positioned to unlock the value of not only our current production, but our future production in Portugal and in Quebec, while minimizing dilution and maximizing shareholder value as we go forward. That's the end of my formal presentation. I'd like to switch it over to Q&A if anyone has any questions. Let me see if I can. Just looking at some of the questions that have come in no particular order. You know, from a capital market standpoint, you know, yes, we are always looking for to broaden our coverage and our exposure through venues like this and reaching out to analysts as we go forward.
I think that's just a question of time more than anything else. I think we'll get that as we continue to narrow the valuation gap. When you look at the most important milestones for the next 12 months, I think it's going to be for us is cash generation and continuing to unlock the value of the various assets. We have a lot of goalposts to continue to knock down, and I think as we continue to move each one further into the positive sectors of, in terms of, you know, achieving our goals on time and on budget, I think we'll continue to be re-rated in the market as we go forward. In terms of the share repurchase program, we continue to repurchase.
I think we average probably, based on the requirements, you know, depending on liquidity, you know, 10 to 20,000 shares a day. There is a restriction on how we can do it, but we continue to be in the market on a daily basis doing that. Oops. My machine is stuck, sorry. Just a question on underground ore. When you look at the underground ore, right now, the underground component at Minera Don Nicolás is relatively modest. We go through cycles of development and production. Right now we are at a point of development and as we'd outlined at the end of the year, Q2 and Q3, we expect to see a significant amount more of underground ore. Underground ore, it allows us to blend a higher component.
The underground material tends to be 4-6 g per tonne versus our stockpile material of about 1 g per tonne. The more we can blend, the higher the head grade through the mill is. Every 1 g per tonne increase through the head grade of the mill is equivalent to 1,000 oz a month of production. I'm sorry, just reading the questions here. Just a question on the green steel. When you look at the premium pricing for 67% grade iron ore, currently the 62% grade material is trading about $106, $107 per tonne. The 65% is trading at about $125 per tonne. We would expect to probably get something in the order of a $40 per tonne premium relative to the 62% index that you see traded on the market. That's for the industry-wide.
They're willing to pay up for the higher quality product really because that's the only way for them to reduce the emissions from the traditional blast furnace production process. As you move to direct reduction iron, electric arc furnaces, they need the higher grade iron ore for the processes to work. Again, if you wanna use scrap steel, you want high grade iron ore to best position your ability to do that. We're seeing it across the globe, with a big focus on the Europe and the Middle East right now, as we go forward. You know, when you look about potential off-takers, we see a lot of potential partners there. What we need to do is finalize the timeline to production, and I think we'll have a lot of interest at that point.
Looking at, I get a slightly different question on the underground. You know, the underground component, as I said, is two-phase. One, obviously providing production today in the short term, but really as we get to the summer months, we'll be in a position to bring an underground drill rig on site and really start significant underground exploration to follow the vein directly. It's a lot easier from underground to explore 'cause it's quite deep at that point, and it will be very much a focus. We don't need to increase the mill throughput. What we need to do is increase the blend of the high grade material. Right now we're probably, you know, two-thirds low grade and one-third high grade when we have enough ore. What we wanna do is continue to shift that to be more high grade.
As I said, when we're processing, you know, 5 g per ton, the CIL plant by itself can produce 50,000 oz. If we're able to achieve that over time, continue with the heap leach, we see a pathway to 100,000 oz producer once we find sufficient high grade ore. In terms of cost base, you know, the all-in sustaining cost in Argentina really is a function of production. It is a relatively remote site, fly in, fly out. For that basis, it really is a function of production. Every oz we can produce in addition, we'll see a reduction in the unit cost. That's why our focus is really on production at this point. I think I'm running out of time at this point.
You know, if there are any questions that I haven't been able to get to, please feel free to reach out directly to us, and we'll get back to you with responses as quick as we can. I just want to emphasize and thank you all for taking your time this afternoon, and I look forward to addressing any questions you may have. Thank you very much for your time this afternoon.