Good morning, everybody. Cerrado Gold is not your typical junior miner. It is a company that is actually already in production, and we are expecting EBITDA of north of $100 million this year from our project in Argentina called Minera Don Nicolás. We also have two other projects that are in development. One in Portugal, which will be a VMS, which will include precious metals as well as some copper, some tin, and some zinc, which are all critical minerals and in demand and seeing great metal prices right now. Then finally in Canada, we have an iron ore project, but it is high-grade iron ore versus 62%, which is the base level. It is a 67% high -purity iron, commands about a 30%-40% premium over the regular iron ore price. That one is longer-term development, probably wouldn't be in production until 2031.
We are just going through permitting there. At the end of the day, the basis of the story is that we have significant cash flow that will help us to develop these other projects, and the cash flow will grow not only to the point where we can start to pay back investors, but also we do not have to worry about diluting the investors, so our shareholders get rewarded by sticking with us. We are going to making some forward-looking statements. Where we are right now, our project in Argentina, we are producing 55,000 oz on average over the last four to five years. However, this year, we went underground. We are getting some higher -grade material from the underground. So our guidance this year is 50,000 oz-60,000 oz, and as we stated in our last financials, we are likely going to be on the upper end of that.
We are just finishing our third quarter. I think when investors see the third quarter financial or production results come out in a few weeks, they are going to be very happy, and we are going to see that it is not going to be an issue that it reached the high end of our guidance. The idea here is that we want to build out a longer mine life. The mine does right now have a shorter mine life. It is only about two and a half to three years. So we have done a significant amount of drilling this year to catch up on that. We have done 75,000 m of drilling. We did 50,000 m on surface targets around our existing mine, and we have had good success there. We also did another 20,000 m in the underground to develop that at depth, because it is open at depth and a long strike.
We also acquired a property called Falcon, which had about 300,000 oz historical resource. So we are doing 5,000 m there just to bring that into our current mine plan. All of this drilling is going to wrap up probably around the end of the year. Then it takes about two months to complete a Feasibility Study, so our PEA. That will include an updated life of mine, and economics on the project. So I think when that comes out in the first quarter, what the market is going to see is that, no, this is not a mine that has got a short mine life. It has got a long mine life, and the grade is improving, which is only going to benefit investors because we are going to see production continue to grow, beyond that 60,000 oz, closer to 100,000 oz in the next couple of years.
As you can see in the first half of the year, we did 28,000 oz. The third quarter, I think, will demonstrate that we're going to be very successful in getting to that 60,000 oz. The second half of the year is strong because most of the production is coming in the second half of the year, from the underground, which is higher- grade material. Our all-in sustaining costs for the first half was about $1,680. Our costs are going to be around that $1,700- $1,800 mark on average. That's just the cost of the mine there, but with gold prices today, we're not hedged. We don't have any, what do you call it, streams or royalties. Everything is selling at spot gold prices. We're seeing significant cash flow coming from the project.
As I mentioned, in terms of developing, we also have the Lagoa Salgada project. Right now we're completing a feasibility study, an updated one. We did have one already on the project, but we've done a lot of metallurgy and other work to improve it. That'll be coming out late this year. As well, we're going into permitting on this project, and we expect to have our permits submitted in the beginning of December. It takes 120 days to get that back, so we're guiding to the end of the second quarter because there's always some delays. But by this time next year, we should be in construction on this project. It's about an 18-month construction period, and then we see first production coming in late first quarter, early second quarter of 2029. Finally, we have the iron ore project in Quebec.
That would produce 8 million tons of 67% iron ore. Right now we're finishing a Feasibility Study on that, and we're going to permitting, which takes about two years in Quebec, to get there. This project will be a cash cow. It'll probably have cash flow in excess of $250 million a year, free cash flow. What the market likes about this is it's a high- purity iron ore, so it can go right into an electric arc furnace. The steel producers like it because they can mix it with the recycled materials that they have, and it's easier on their furnaces. It reduced cost. Typically you get about a 30%-40% premium over the market price for this premium product. Cash balance right now, we have about $25 million in the bank.
We had purchased back some of our royalties and streams that we had on the project. Likely the cash position will stay there this year, but then next year we do expect that to grow towards $100 million and beyond, very quickly in the coming years, which will help us to fund the other projects. As you can see here, this is a very broken down, very simplistic chart. The bar at the top shows you where we are now. We're currently around 55,000 oz- 60,000 oz of production. The project in Portugal, when it comes online in 2029, will add another 50,000 oz of gold equivalent production. When the project in Argentina, or sorry, in Quebec comes online, from an equivalent production would bring us over 300,000 oz of gold equivalent production.
Obviously, it's three different metals, but that just from a valuation perspective, helps you to understand the growth that's happening in a relatively short timeframe. By 2031, the company is going to more than double in size. Looking at the EBITDA and the net asset value, what I will say is the technical studies were done earlier at much lower gold prices. The project in Argentina, we were using $2,100 gold. In Portugal, it was $1,700 gold. As we update those technical studies later this year, I'll be able to update this chart. Obviously, the EBITDA we expect from currently is north of $100 million. Obviously, this is going to be a lot more, but even at lower gold prices, you can see that by 2031 when the project in Quebec comes online, we're going to have $500 million of free cash flow a year.
A lot of growth happening in a relatively short timeframe. You can see here the production cycle. We bought this mine in 2020. It was a bit of a distressed asset. It was some white good manufacturers from Argentina that were trying to import U.S. dollars. They spent about $ 200 million building this mine. They could never get it running properly. We purchased it for $45 million, immediately ramped up production. We've been running it at about $50 million -$ 55 million. However, we started to change the mix. We did a heap leach, rather than just open- pit, and we started going underground, and we're getting some higher- grade material coming from the underground, which is going to help us as we expand the underground. With the exploration program, we've done finding higher -grade material to ramp up production towards that 100,000 oz in the next couple of years.
Looking at our capital structure, share price right now is about CAD 2.32. We've been up as high as CAD 2.83 in the last month. Gold prices come off a little bit in the last few weeks. I think until after the election, we're going to see some volatility in the gold price, but at the same time, Goldman Sachs is still predicting $4,900 gold by the end of the year, and they're one of the more bearish predictors of metal prices. We have 143 million shares outstanding. We have a few warrants that are owed to Eric Sprott. Other than that, it's just some options and RSUs that go to management for compensation and retention. 160 million fully diluted, which is relatively low for a mining company. We trade about 500,000 shares a day on value. Market cap right now is CAD 331 million.
As I mentioned, we have $25 million in the bank. We also have $ 15 million still owed to us from Anglo American, and one other company from some asset sales. In terms of research coverage, we have three different analysts covering us. Average price is about CAD 3.80. In terms of the ownership, management owns about 10%, institutions including Eric Sprott, OCM, have 23%, and then 68% is still on the free- float or more retail or high- net worth investors or family offices. We do have some significant shareholders in there that own about 5% or 6% of the company. The stock has done very well. As I mentioned, we've gone up to CAD 2.86 about a month ago. Gold prices come off. We trade very close to the gold price. We believe that there's still a lot of growth to happen here.
In terms of the assets, we've spent about $40 million. We've invested into these projects. As I mentioned at Minera Don Nicolás, we're doing a very significant drilling program, and we went into the underground. We'll be updating that Feasibility Study or that technical study in the first quarter, which will give us an average of five- to six- year mine life from the two- to three -year mine life. That's one of the reasons that we're trading at a bit of a discount compared to some of our peers. The market falsely believes that it's a short mine life, and it's not going to last. However, with the updated technical study, that'll come out in the first quarter, that'll be put to bed, and the market will understand that this is an expanding and growing mine life at this property. There's a lot of opportunity still to come here.
The project in Lagoa Salgada will be finishing the Feasibility Study, submitting our permits later this year. By the end of the second quarter, we expect to have our permits in hand and starting construction. First production would come in the late first quarter, early second quarter of 2029. Finally, the project in Quebec, we're finishing a Feasibility Study on that, which will be out in the first part of next year. We also have our environmental and our construction permits. It takes about two years for permitting in Quebec, so we expect to be in a position to start construction there in early 2029 and two years to construct it. So we'd be in production by 2031. From now, 2026 to 2031, in a five-year period, significant cash flow opportunities and growth for the company. This is a project in Argentina.
You can see here that this is the area that we're in. The green represents an area called the Deseado Massif, which is a very prolific area, very similar to the geology in Nevada. There's a lot of gold companies that are well known that are our neighbors. We have Pan American Silver, Cerro Moro project just to the east of us. We have AngloGold Ashanti, which is the Cerro Vanguardia just to the south. Then we have Newmont and Hochschild and McEwen to the west of us. These projects have produced in excess of 200 million ounces. They have very large resources, so it's a very prolific camp. We owned 330,000 hectares just for relativity. That's about the size of Rhode Island. We've only explored less than 10% of that.
There's a lot of opportunity for us to continue to grow this project and make it a lot bigger as we move forward. This just shows you our neighbors and their growth cycle. AngloGold Ashanti started in the 1990s. It took them about 18 - 20 years to build up to that 6 million ounce resource. They started with open- pit. They went underground and did some heap leach. Newmont did it in about eight years, but they did an acquisition of Goldcorp. They started with underground, and they went to open -pit. Pan American Silver started with underground and open pit, and they took about six years to go from 600,000 oz up to 1.7 million ounces. We're just starting out. We're at the beginning of a cycle. Are we going to be as big as these other guys?
I can't say for sure, but at the same time, I can't say that we won't be either. The drills are turning, and I think the first report to come out in the first quarter next year will definitely demonstrate we're on a path to similar growth as our peers. Again, we have a hub- and- spoke operation. Our mill is in the middle. We have several targets around us. With the mine started with open- pit, we added in some heap leach, which provides steady- state production, low cost. Then we started to go underground this year because we have a higher- grade opportunity that we're chasing, which is improving. You can see here the mill and the heap leach operations. That provides about 45,000 oz regularly a year from low- grade heap leach operations. Then we have the underground. You can see the white hashed area.
That was the original open- pit that you see to the right. We've gone in from the bottom of the open- pit. There was about 20,000 oz-30,000 oz that we're drilling just below. We didn't go underground for that. Everything is open at depth here, so we're setting up drill platforms, and we drilled 20,000 m below the open- pit this year to expand that operation at depth, and along strike. Again, everything is open at depth, and so that provides higher- grade material, typically 4 g-6 g, versus the 1 g-2 g material we get from the heap leach. Again, very large program happening this year, 50,000 m on surface. We have a 10 km strike, several projects that we're chasing. We also acquired an area called Falcon. Las Calandrias is where our heap leach operations is. About 20 km away is this Falcon project.
That added about 200,000 oz immediately. It's historical, so we have to do 5,000 m of drilling to include it in our life of mine. However, there's several other opportunities like this very close to our project, and we think we can consolidate that belt and could increase our resource north of 1 million ounces of potential resource. Our project in Portugal, the copper belt represents the Iberian Pyrite Belt, which is a very prolific belt that lies between Spain and Portugal. You have mines such as the Rio Tinto mine, which has been around since the Roman times. Neves-Corvo is to the south of us, about an hour south of us. That was Lundin. They just sold it to Boliden. These mines have all been around 20+ years. Neves-Corvo, [inaudible] recently sold for over $ 1.8 billion to other parties. But again, what we like about this, excellent infrastructure.
We're close to the highway, we're close to the rail. We have port access very close. We're right now on this project. We're progressing through permitting on it. We do expect to get those permits by the end of the second quarter and then move into production, or construction, sorry, around this time next year. We did have an initial Feasibility Study on it when we were earning into the project of a NPV of $ 147 million, 39% IRR. We've done a significant amount of work on the metallurgy and other sequencing and the mine overall. So we're going to be updating our Feasibility Study close to the end of this year, and we do expect to see a significant improvement to the NPV, especially with the metal prices as well as the work we've done on it. It's a mix of metals, as you can see here, 40% precious.
However, we do have a significant amount of zinc. So on a zinc equivalent basis, it's $ 0.59 a pound for the first five years, $ 0.79 for the life of mine. Zinc right now is trading at about $ 1.75. Very good margins, and it's in the lowest part of the cost curve for any project out there. This is a mine that will be in operation for a long time. We have a 14-year mine life. We have over 20 million tons of resource, and that's all in just one little small area. You can see on the image on the right, it's an 8 km trend. There's a little area there. It's about 1.7 km. All of our resource lies in that area. Like I said, it's a 14-year mine life.
These mines, as you can see, there's a lot of opportunity to expand it. Just as an example, Sandfire Boliden started as one or two pods and they've continued to expand at a long strike and at depth. This mine will definitely not be going anywhere anytime soon. There's a lot of upside and expansion potential for it. Finally, our project in Quebec. The one thing we really like about this project is a lot of the infrastructure that we would need to get our product to market is already there. It used to be a timber camp, so there's an existing rail line that runs from the town of Chibougamau, which is about 500 mi north of Montreal, down to the Port of Saguenay, which is on the St. Lawrence River. It's a deepwater port.
All of that already exists, so we only need to build a 25 km spur to hook into the rail head. That's an excellent benefit for the company. We had done a Feasibility Study or a PEA on this in 2022, which showed very good economics, $ 1.6 billion NPV, 43% IRR. This would have been cash flowing $350 million a year, $235 million a year of free cash flow. That's a 20-year mine life on this project. That was at 65% concentrate. We've now moved it to 67%, which actually commands a premium. Like I said, over the regular market, we'll get a 30%, 40% premium on this material. This one here right now, we are putting a bankable Feasibility Study on it, which will come out in the first quarter next year, first or second quarter next year. Then we're going into our permitting.
It takes about two years for permitting, so we'll be looking to break ground here in 2029. This one's a little further off, but definitely a lot of upside and significant cash flow potential for shareholders. As I mentioned, we have 1.3 billion tons of resource. We have a 20-year mine life. That's only using one-third of the resource. This is a mine that could go on for 50 years, or we could ramp up the throughput from 8 million tons beyond. There's a lot of opportunity here. This is a very significant project, and it's the easiest one of them all. It's all magnetite. We crush it, we run it over magnetic drums, and concentrate the material and ship it. It's one of the easiest mines out there. It's just very big.
Again, we have a solid cash balance, $25 million, and we expect that to continue to grow through the year and into next year. Free cash flow, we had $57 million of EBITDA in the first half of the year. We expect north of $100 million for the year. We also have additional cash to be received from asset sales and an option on a property of another $15 million. So we are well-funded to delivery. Overall, the mine is moving forward. So you have a mine here that has steady- state production, which is growing in this year and next year. You have two assets that are near- term and longer- term, which will be developed with very little dilution, if any, to shareholders.
You have an opportunity here to be a part of a very significant growth plan in the next five years at a bit of a discount to what our peers are trading today. That is all I have. Thank you so much.
Mr. McAllister, we want to get time for a couple quick questions, if that is okay with you. This is for our live webcast as well, our audience online.
Yes. From Cerrado's point of view, is the Argentina project a brownfield project? I am talking about the underground mine.
Yeah.
And also—
Sorry, go ahead.
—What is the depth, currently the depth of the underground mine?
Yeah. The pit went down about 150 m. So right now, we're mining at about 160 m- 170 m below surface. However, we're mining from the bottom of the open pit, so we're just below the surface right now. But the depth, we have drill holes that go down 120 m below the existing operations, and it's still in ore. So we don't know what the extent of how deep it's going to go. Right now, I can tell you for sure it goes at least another 120 m below where we are, but it's open to depth. As we mine, we'll continue to drill down further in a long strike. So this is an opportunity for it to be much bigger. Then, sorry, your other question was about Argentina and is it brownfield? Yeah.
The mine is a brownfield operation in the sense that it is an operation. We are going to produce up to 60,000 oz this year, likely growing that next year to somewhere in the 70,000 oz range. What we like about it is, while we do have operations and we have significant cash flow, it is relatively junior in the sense of there is a lot of untapped exploration that can happen. We are doing, as I said, 20,000 m underground, 50,000 m on surface this year. We own the four drills. That is going to continue next year. We are certifying our lab so we can do all our assays in-house and not have to send them out, because assays take a long time to come back. We now are certifying our lab. That will be ready in November, so we can have very quick turnaround time.
I think what you are going to see here is a mine life right now that is two and a half to three years grow to potentially six years with this updated resource, and then continue to grow on further drilling. I think what the market will see is that this is a growing asset, not one that is shrinking.
Yes. I am going to ask you to use the microphone, if you don't mind. Thank you.
Does the inflation in Argentina impact your cost for the sustainable cost? Also, can you move the capital in and out of the country? Any incentive you got from the Argentine government?
Yes. Right now, inflation does affect. Inflation is running. When Milei first came to power and he devalued the currency, inflation was like 300%. It was crazy. He has got it down to about 30% annually now, which for Argentina is actually pretty good. But that does affect us, that Argentina has strong unions. So labor and the inflation does have an impact on our costs. Our all-in sustaining costs run as, for the first half of the year, it was just under $1,700. They are typically going to run $1,700-$1,800 all -in sustaining. A big portion of that is unfortunately the inflation and the labor. Otherwise, the cost would be lower. But it still has very good margins given the gold price today. In terms of moving capital, yes.
Milei got rid of the capital control, so now we can dividend back our, and we have brought our capital out of Argentina back to Canada to the corporate office. That's not an issue anymore. He does provide, especially for new companies coming in, we were starting to see a lot more capital infusion and foreign investment into Argentina. Glencore, McEwen, Anglo are all investing billions of dollars into building and expanding their mines. Based on the way the government is moving now, t hey know that they can get their money out of the country, so that's not a worry about investing there anymore. It's definitely seen there's a lot of capital credits and tax credits for companies that are building or expanding their mines.
Thank you. Gross revenue for 2026 and possible for 2027 and number of employees, please.
I'll give you cash flow. Gross revenue is going to be higher than that. It's probably going to be over a $500 million. I would say cash flow is going to be north of $ 200 million, like $ 250 million. Free cash flow is going to be, or EBITDA, is going to be at $ 100 million -$ 120 million range, depending on where the gold price settles. That's where we are right now. Next year, we're going to be increasing our production by about 10,000 oz- 15,000 oz. If the gold price holds in where it is, that's obviously going to add a significant amount for that. You had one other question I forget.
Number of employees.
Oh, number of employees? Right now, it is 350. We have a couple of different shifts, and it runs seven days a week. We have a two week on, two week off. So you have to have enough employees that there is always a two shifts at the mine.
Thank you.
Yeah.
Anybody else? All right.
Great. Thank you.