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Cerrado Gold Inc. Files Independent Technical Report for the Updated Mineral Resource Estimate at Its Minera Don Nicolas Gold Project in Santa Cruz Province, Argentina

Oct 20, 2020

  • M & I Resources include 198,808 Ounces Au and 241,903 Ounces Ag
  • Inferred Resources include 348,693 Ounces Au and 320,118 Ounces Ag

Toronto, Ontario–(Newsfile Corp. – October 20, 2020) – Cerrado Gold Inc. (“Cerrado” or the “Company”) is pleased to announce the filing of a final draft technical report entitled, “Independent Technical Report for the Minera Don Nicolás (“MDN”) Gold Project, Santa Cruz, Argentina”, supporting the updated mineral resource estimate, and the first resource update since 2012 at the Minera Don Nicolás epithermal gold silver project in Argentina (the “Final Draft Technical Report”). The Final Draft Technical Report is dated September 25, 2020, has an effective date of August 31, 2020, and was prepared by SRK Consulting (Canada) Inc. (“SRK”) in accordance with the Canadian Securities Administrators’ National Instrument 43-101 and Form 43-101F1. The Mineral Resource Statement reported herein was prepared in conformity with generally accepted CIM “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines.”

The Final Draft Technical Report was filed with the Toronto Stock Exchange (the “TSX”) for review and comment and is subject to final TSX approval. Cerrado is, in conjunction with the previously announced qualifying transaction being completed with BB1 Acquisition Corp, making application for listing on the TSX.

Highlights from the Final Draft Technical Report include:

  • Resources are on an “as purchased” basis and do not include any additional ounces added by Cerrado Gold.
  • M & I Resources of 1,126,200 tonnes grading 5.49 g Au/t and 8.37 g Ag/t for 198,808 ozs Au and 241,903 oz Ag.
  • Inferred Resources of 4,663,700 tonnes grading 2.33 g Au/t and 4.78 g Ag/t for 348,693 ozs Au and 320,118 oz Ag.
  • Don Nicolás Operation consists of nine separate deposits and 12 high priority targets.
  • The property contains numerous opportunities to expand resources and extend mine life via further drilling in surrounding areas such as the Baritina, Chulengo and Goleta areas, as well as drilling at depth for underground resources.
  • Property encompasses over 272,000 hectares and is located within the highly prolific Deseado Massif region, home to several multi-million-ounce deposits including Cerro Vangaurdia (Anglo Gold), Cerro Negro (Newmont GoldCorp), Cerro Morro (Yamana).

The MDN operation is currently a producing gold mine owned and operated by Cerrado Gold Inc. Cerrado acquired the mine in March 2020. In June of 2020, Cerrado commissioned SRK to prepare a technical report for the MDN Project. The services were rendered between July and August of 2020 leading to the preparation of the current NI 43-101 Mineral Resource Estimate

The Don Nicolás Gold (Au) and Silver (Ag) Mine (MDN) is located approximately 2,000 kilometres (km), by road, south of Buenos Aires in the mining friendly Santa Cruz province of the Patagonia region of Southern Argentina. The Don Nicolás Operation consists of nine separate deposits and 12 high priority targets within one contiguous irregular shaped block totaling 272,598.17 ha surrounding two former tenements (La Paloma and Martinetas), approximately 40 km apart. MDN has a fully operational mine and a 1,000 tpd CIL plant constructed in 2017 located near the Martinetas pits supporting a targeted production rate of approximately 50,000 ounces of gold per annum.

Mineral resources as estimated by SRK are summarized in Table 1.1.

Table 1.1: Mineral Resource Statement*, Don Nicolás Project, Santa Cruz, Argentina, SRK Consulting,

August 31, 2020

Category Quantity Grade Metal
Au Ag Au Ag
tonne gpt gpt Oz oz
Open Pit** Cut-off 0.3 g/t gold
Measured 249,400 4.32 5.50 34,668 44,100
Indicated 820,600 5.77 9.61 152,237 183,126
Measured and Indicated 1,070,000 5.43 8.39 186,905 227,226
Inferred 4,108,400 1.59 3.75 210,476 195,252
Underground** Cut-off 3.0 g/t gold
Measured 0 0.00 0.00 0 0
Indicated 56,200 6.59 8.12 11,903 14,677
Measured and Indicated 56,200 6.59 8.12 11,903 14,677
Inferred 555,300 7.74 8.41 138,217 124,867
Combined Mining
Measured 249,400 4.32 5.50 34,668 44,100
Indicated 876,800 5.82 9.48 164,140 197,803
Measured and Indicated 1,126,200 5.49 8.37 198,808 241,903
Inferred 4,663,700 2.33 4.78 348,693 320,118



*- Mineral resources are reported in relation to a conceptual pit shell. Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate. All composites have been capped where appropriate.

**- Open pit mineral resources are reported at a cut-off grade of 0.3 g/t gold for the open pit portion and 3.0 g/t gold for the underground deposits. Cut-off grades are based on a price of US$1,550 per ounce of gold and gold recoveries of 95 percent at Martinetas and 88 percent at La Paloma, without considering revenues from other metals.

Mark Brennan, Co-Chairman and CEO of Cerrado Gold commented: “This updated Mineral Resource Estimate for the Don Nicolas operation provides an initial base case resource that supports our strong outlook for current gold production and provides us with a base line from which to continue to grow the resources through an expanded exploration program in the coming years.”

Mineral Resource Estimate

The Mineral Resource Estimate for the Minera Don Nicolás Gold Project was prepared by SRK. The effective date of the Mineral Resource Estimate is August 31, 2020. The MDN database contains 911 diamond drill holes and 3,440 reverse circulation (RC) holes representing 124,923 metres of drilling. Also included in the database are 1,352 trenches totalling 60,471 metres. The mineral resource model prepared by SRK considers 750 core holes, 3,138 RC holes drilled by the owners of the MDN Property during the period of 1994 to 2020. The resource also includes data from 986 trenches. Mineral resources were estimated by ordinary kriging or inverse distance cubed (ID3) in Leapfrog® Edge by Cid Bonfim who is a Qualified Persons as defined in National Instrument 43-101(Chilean Mining Commission, 0291) of Cerrado and validated by SRK using GEOVIA GEMS™ Version 6.8.3. Mineralization wireframes were constructed using Leapfrog Geo and validated using GEMS 6.8.3. Geostatistical analysis and capping were evaluated using Sage2001 and GSLIB. Block models were constructed in Leapfrog and GEMSs 6.8.3.

Quality Assurance and Quality Control

Since the early 2000’s analytical work was carried out by ALS and Alex Stewart Laboratories (ASi). Drill core samples were prepared in the ALS Lab and Alex Stewart lab, in Mendoza, Perito Moreno and San Julian all are in Argentina. Pulp samples were then sent to analytical Laboratory, located in Argentina and ALS in Lima, Peru. The core samples are analyzed for gold (ppm) by fire assay using AA finish, sample results higher than 10 Au g/t was systematic re-assayed using gravimetric finish.

The external laboratories and MDN Project have routine quality control procedures which ensure that every batch of samples includes sample repeats, commercial standards and blanks. Both External Laboratories are independent from Cerrado Gold.

In May 2020, a re-sampling program was initiated to evaluate and check some historical assays at the MDN Project. A total of 708 pulps were sent to ALS from 102 drill holes drilled between 2000 to 2017. Results of the re-sampling program didn’t identify any biases with the original assay data in the database and the re-assayed samples agreed reasonably well with the original assays

QA/QC data were reviewed by Linda Bloom in 2006 and 2008 and by Barry Smee in 2010 (Bloom, 2006 and 2008, Smee, 2010). Coffey carried out a QA/QC review in 2012 as part of the feasibility study compiled by Tetra tech (Tetra Tech, 2012).Currently, in the opinion of SRK the sampling preparation, security and analytical procedures used by at the MDN Project are consistent with generally accepted industry best practices and are therefore adequate for inclusion in the estimation of mineral resources.

Qualified Persons

The resource estimation work was completed by Dr. Gilles Arseneau, P.Geo (APEGBC, 23474) an appropriate “independent Qualified Person” as this term is defined in NI 43-101. The effective date of the resource statement is August 31, 2020. Mr. Casey Hetman, P.Geo (APEGBC, 30185), a Corporate Consultant with SRK, reviewed drafts of the Final Draft Technical Report prior to its delivery to Cerrado as per SRK’s internal quality management procedures. Mr. Hetman did not visit the Project.

Review of Technical Information

The scientific and technical information in this press release has been reviewed and approved by Robert Campbell, P.Geo., Vice President, Exploration and Director for Cerrado Gold Inc., who is a Qualified Persons as defined in National Instrument 43-101.

Minera Don Nicolas Overview

Minera Don Nicolas is located 1,625km south west of Buenos Aires, Argentina in the Deseado Massif region in the mining friendly province of Santa Cruz. The project is comprised of several exploration concessions totaling 272,598 Ha’s. The largest regional centre is Comodoro Rivadavia, which provides logistical and other support for the operations.

MDN is situated within the world renown Deseado Massif where the underlying geology of the region is dominated by rhyolitic and andesitic volcanic and tuffaceous volcaniclastic lithologies of Middle to Upper Jurassic age (130 to 170 ma). It is crisscrossed by numerous extensive fault and fracture zones which served as conduits for hydrothermal activity during periods of Jurassic volcanism. The result of this activity is a widespread network of shallow level mineralized “epithermal” fissure veins, breccias, and stock-work systems, many of which carry potentially economic Au and Ag mineralization. The Deseado Massif region is host to several epithermal Au-Ag deposits home to several multi-million-ounce deposits including Cerro Vangaurdia (Anglo Gold), Cerro Negro (Newmont GoldCorp), Cerro Morro (Yamana).

In February 2012, Minera IRL published a Full Feasibility Technical Report in accordance with National Instrument 43-101 (“NI 43-101”).

Construction of the facilities was completed in 2017 and has been ramping up to full capacity during 2018 and 2019. Current mining operations are conducted in two areas, the high grade La Paloma deposit and the Martinetas deposits, approximately 30km apart. Ore is processed through a 1,000 tpd CIL plant located near the Martinetas pit. The project currently supports 325 employees and contractors on a fly-in fly-out basis. Don Nicolas has strong regional backing having signed agreements with the two neighboring communities.

Cerrado undertook a fundamental review of the MDN resource database and based upon reinterpretation, Cerrado estimates that the operation currently hosts a non 43-101 compliant resource of approximately 2.7million tonnes at an average grade of 4.17 g/t with numerous targets areas that can be expected to be quickly added to the resource inventory with only modest exploration efforts. We note current resources are restricted to open pitable material as previous operators focused on open pitable targets only. That said many known ore zones remain open at depth, similar to the other mines in the region offering significant exploration potential.

Cerrado plans to introduce numerous new operational strategies at MDN, which are expected to see a significant improvement in the overall operation within a relatively short period of time. The Company’s initial focus will be on enhanced grade control activities to lift the head grade delivered to the mill, sustaining the mill throughput rate 1,000 tpd and a restart of exploration efforts that have been on hold for the better part of three years.

About SRK

The SRK Group comprises over 1,500 professionals, offering expertise in a wide range of resource engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This fact permits SRK to provide its clients with conflict-free and objective recommendations on crucial judgment issues.

SRK has a demonstrated track record in undertaking independent assessments of Mineral Resources and Mineral Reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

About Cerrado Gold

Cerrado Gold is a private gold production and exploration company with gold production derived from its 100% owned Minera Don Nicolas mine in Santa Cruz province, Argentina. The company is also undertaking exploration at its 100% owned Monte Do Carmo project located in Tocantins, Brazil. For more information about Cerrado Gold please visit our website at www.cerradogold.com.

For further information please contact

Mark Brennan
CEO and Co Chairman
Tel.: 647-796-0023
[email protected]