Cabral Gold (TSXV:CBR) - Advancing Towards Q4 2026 Production

Cabral Gold: Transition to Production & Exploration Strategy – Detailed Summary

Key Concepts:

• Oxide Mining (Stage 1): Low-cost, free-digging gold extraction from weathered material to generate initial revenue.
• Hard Rock Resources: Deeper, more substantial gold deposits requiring conventional mining methods; the long-term growth driver.
• Trial Mining License: A permit allowing for limited production (1,500 tons/day) while a full mining license is secured.
• Full Mining License: Permit required for increased production capacity (3,000 tons/day) as outlined in the PFS study.
• Kuyu Cuyu District: A large geological area containing multiple gold deposits and significant exploration potential.
• PFS (Preliminary Feasibility Study): A comprehensive study outlining the economic viability of a mining project.
• Drone Magnetic Survey: A modern geophysical technique used to identify subsurface geological structures.

1. Financial Update & Strategic Shift

Cabral Gold recently secured $45 million USD in a gold loan, avoiding equity dilution. This financing is crucial for initiating construction of their first gold mine in northern Brazil, with gold production anticipated in Q4 2026. The company’s strategy has shifted from a continuous “drill-raise money” cycle to a two-stage approach: starting with oxide mining to generate revenue and then using those funds to develop the larger, underlying hard rock resources. This decision was initially met with market skepticism but is now reflected in the company’s share price.

2. Kuyu Cuyu Deposit Characteristics & Two-Stage Development

The Kuyu Cuyu gold deposits are characterized by deep weathering, averaging 60 meters, resulting in “free-digging” oxide material. This is unusual compared to most gold deposits globally. The deposits are situated on a topographic high, contributing to the deep weathering profile. This allows for a relatively modest Stage 1 operation focused on oxide mining, providing cash flow to fund exploration and development of the more substantial hard rock resources. Since the last resource estimate in 2022, four new gold discoveries have been made within the Kuyu Cuyu district, highlighting its potential. The company believes avoiding continuous equity raises is vital to prevent excessive share dilution.

3. Construction Progress & Operational Details

Construction is “in full swing” with 143 personnel currently on site. An additional 70-80 people are dedicated to exploration. The company has secured 50 pieces of heavy equipment and is actively building plant infrastructure. Significant progress has been made on road upgrades, creating a proper “mine road” for access. Concrete pouring for major foundations is expected to be completed by the end of the year. Senko is assisting with the engineering phase, and an “owners team” led by Luis Salaro (experienced mining engineer) has been established.

4. Production Ramp-Up & Performance Tests

Commissioning is planned for Q3 2026, with commercial production targeted for Q4 2026. The current project is based on processing 1,500 tons per day under a “trial mining license.” The Preliminary Feasibility Study (PFS) outlined a potential capacity of 3,000 tons per day, requiring a full mining license. The preliminary permit for the full mining license is expected in early 2027, but isn’t needed until mid-2027. Key risks to the schedule include potential weather-related delays and the logistical complexities of coordinating multiple contractors and equipment deliveries.

5. Permitting & Environmental Approvals

Cabral Gold is operating under trial mining licenses. The application for a full mining license is well underway, with public hearings held in the community and local town with no opposition. The company anticipates receiving the full mining license in January.

6. Exploration Strategy & Recent Discoveries

Despite the focus on production, Cabral Gold is maintaining an aggressive exploration program with three drill rigs operating. The primary focus is on expanding the hard rock resources. Recent drilling between the Central Gold deposit and the PDM discovery (2 km apart) has revealed a connecting structure identified through a recent drone magnetic survey. This structure has yielded gold mineralization, opening up a significant exploration trend. Drilling is also underway at Jerem Sema and Mashishi, and plans include down-dip extension drilling at MG and Central.

7. Technical Details: Drone Magnetic Survey & Geological Structures

A recent drone magnetic survey proved crucial in identifying a previously unclear geological structure connecting the Central Gold deposit and the PDM discovery. This survey provided a higher resolution image than previous airborne surveys, revealing a clear structural link and guiding subsequent drilling efforts. The identification of this structure is considered “tremendously exciting” due to its potential to expand the known gold mineralization.

8. Notable Quotes

• Alan Carter: “We think there's a better way of doing it [funding exploration]… that is start with a relatively modest stage one operation to mine the oxides and use that cash to then fund the drilling of the of the much larger hard rock resources.”
• Alan Carter: “The bigger prize at Kuyukuyu is the definition of this very, very large gold district that clearly contains multiple deposits.”

9. Data & Statistics

• Financing: $45 million USD gold loan secured.
• Production Target: Q4 2026.
• Trial Mining License Capacity: 1,500 tons per day.
• PFS Capacity: 3,000 tons per day.
• Weathering Depth: Average of 60 meters.
• Personnel on Site: 143 (construction) + 70-80 (exploration).
• Heavy Equipment: 50 pieces.
• New Discoveries Since 2022: 4.

10. Synthesis & Conclusion

Cabral Gold is strategically transitioning from an exploration-focused company to a near-term gold producer. The $45 million gold loan provides the capital to initiate oxide mining, generating revenue to fund further exploration and development of the substantial hard rock resources at Kuyu Cuyu. The company’s success hinges on maintaining the construction schedule, securing the full mining license, and continuing to deliver positive exploration results. The combination of near-term revenue and significant exploration upside positions Cabral Gold for substantial growth and value creation for shareholders. The recent exploration successes, particularly the connection identified between Central and PDM, underscore the district’s potential and the effectiveness of the company’s exploration strategy.