Cerrado Gold’s Earnings Call Highlights Strong Growth

Cerrado Gold Inc ((TSE:CERT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cerrado Gold Inc. recently held its earnings call, revealing a positive outlook for the company. The sentiment was buoyant, driven by strong production and financial performance, alongside significant progress in cost reduction and expansion plans. Despite challenges with equipment costs and operational issues, the company’s increased production guidance and strategic initiatives were highlighted as key strengths.

Record Heap Leach Production

Cerrado Gold reported a remarkable achievement in Q1 2025 with the production of 11,163 gold equivalent ounces (GEO). Notably, the heap leach operation contributed a record 7,228 GEO ounces, marking a significant increase from the previous year. This milestone underscores the company’s operational efficiency and strategic focus on enhancing production capabilities.

Significant Increase in Adjusted EBITDA

The company experienced a substantial boost in its financial metrics, with adjusted EBITDA reaching $4.8 million. This is a stark contrast to the $1.1 million loss recorded in the previous year. The improvement was primarily driven by an $8 million increase in revenue, supported by higher gold prices, showcasing Cerrado Gold’s robust financial health.

Reduction in All-in Sustaining Costs

Cerrado Gold achieved a 6% reduction in all-in sustaining costs, bringing them down to $1,932 per ounce from $2,045 in Q1 2024. The company has set a target to further reduce these costs to between $1,500 and $1,700 per ounce, reflecting its commitment to enhancing operational efficiency and profitability.

Strengthened Balance Sheet

The company’s balance sheet showed significant improvement, with liabilities reduced considerably. Cerrado Gold decreased promissory notes by $4 million, trade payables by $3.4 million, and overall debt by $5 million. These reductions highlight the company’s focus on financial stability and prudent fiscal management.

Expansion Plans and Increased Production Guidance

Cerrado Gold has revised its production guidance upwards, now targeting 55,000 to 60,000 ounces annually. This increase is supported by plans to expand resource and production capabilities at MDN and Lagoa Salgada, indicating a strategic push towards growth and increased market presence.

Higher Equipment and Labor Costs

The company faced challenges with increased equipment rental and labor costs, which led to a $540,000 rise in expenses. While these costs slightly offset the improved gold ounce sales, Cerrado Gold remains focused on managing these expenses effectively.

Challenges in Crushing Circuit

Operational challenges in the crushing circuit have been a concern for Cerrado Gold. However, recent improvements are expected to address these issues, demonstrating the company’s proactive approach to overcoming operational hurdles.

Forward-Looking Guidance

Looking ahead, Cerrado Gold provided robust guidance for the future. The company plans to maintain strong production levels, with a focus on heap leach operations. The adjusted EBITDA is expected to remain strong, supported by increased revenue. Cerrado Gold aims to further reduce all-in sustaining costs and strengthen its balance sheet. The company is also set to commence a 20,000-meter drilling program and begin underground production by the third quarter, underscoring its commitment to growth and expansion.

In summary, Cerrado Gold’s earnings call painted a positive picture of the company’s current performance and future prospects. With strong production numbers, improved financial metrics, and strategic expansion plans, the company is well-positioned for continued success. Despite facing some operational challenges, Cerrado Gold’s proactive measures and forward-looking strategies suggest a promising outlook for investors and stakeholders alike.