Cerrado Gold Inc ((TSE:CERT)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Cerrado Gold Inc’s latest earnings call presented a balanced sentiment, reflecting both significant achievements and operational challenges. The company celebrated milestones such as the acquisition of Ascendant Resources, substantial debt reduction, and a notable increase in heap leach production. However, these accomplishments were tempered by a decrease in gold equivalent ounces production, lower adjusted EBITDA, and increased all-in sustaining costs. The overall sentiment suggests a mix of positive growth potential alongside existing operational hurdles.
Acquisition of Ascendant Resources
Cerrado Gold completed the acquisition of Ascendant Resources on May 16, marking a pivotal moment for the company. This strategic move is expected to significantly enhance Cerrado’s asset base, impacting both the balance sheet and income statement positively. The acquisition is seen as a key driver for future growth and expansion.
Debt Reduction
In a strong financial maneuver, Cerrado Gold has repaid approximately $18 million in debt so far this year, with $10 million cleared in the second quarter alone. The company is on track to reduce its debt by $30 million by the end of the year, showcasing a robust commitment to strengthening its financial health.
Heap Leach Production Increase
The company reported a record heap leach production of 7,864 ounces, a significant leap from the 2,400 ounces produced in the previous year. This increase underscores Cerrado Gold’s operational efficiency and its potential to boost production capacity in the coming years.
Strong Growth in MDN Operation
Cerrado Gold’s MDN operation is poised for substantial growth, with heap leach production expected to rise from 13,000 ounces in 2024 to approximately 36,000 ounces in 2025. The company is targeting over 50,000 ounces next year, indicating a strong trajectory for future output.
Upcoming Feasibility Studies
The anticipated release of optimized feasibility studies for the Lagoa Salgada and Mont Sorcier projects is expected to highlight strong net present values (NPVs) and economic potential. These studies are crucial for assessing the viability and profitability of these projects.
Decrease in Gold Equivalent Ounces Production
Cerrado Gold experienced a decline in gold equivalent ounces production, with 11,437 GEO ounces produced in Q2, down from 16,255 in the previous year. This decrease was attributed to a change in mining locations, impacting overall production levels.
Lower Adjusted EBITDA
The company’s adjusted EBITDA fell to $7.4 million in Q2 2025 from $15 million in Q2 2024. This decline was primarily due to reduced production and revenue, despite a higher realized gold price.
Increased All-In Sustaining Costs
All-in sustaining costs rose to $1,779 per ounce from $1,233 in Q2 2024, largely due to fewer ounces sold. This increase reflects the challenges in maintaining cost efficiency amid changing production dynamics.
Forward-Looking Guidance
Cerrado Gold’s leadership provided comprehensive guidance for the remainder of 2025, maintaining a full-year production target of 55,000 to 60,000 ounces. The company anticipates increased contributions from its Argentina operations in the latter half of the year. Despite challenges, Cerrado remains optimistic about its financial position, expecting strong cash flow and reduced capital expenditure in 2026.
In summary, Cerrado Gold’s earnings call painted a picture of a company navigating through both achievements and challenges. While strategic acquisitions and debt reduction highlight growth potential, production declines and cost increases pose operational hurdles. Investors and stakeholders will be keenly watching how Cerrado Gold balances these dynamics in the coming quarters.