Cabral Gold (TSXV:CBR) - Phase One Heap Leach On Schedule, Q4 Production Targeted

Key Concepts

• Heap Leach Operation: A process where ore is piled on a pad and treated with chemical solutions to extract gold.
• On-Off Pads: A heap leach design where ore is processed for a set period (60 days) and then removed, allowing for operational flexibility and iterative adjustments.
• Saprolite/Oxide Material: Weathered, soft surface material that is "free-digging," requiring no drilling, blasting, or crushing.
• Agglomeration: The process of adding cement to fine, muddy ore to create pellets, ensuring permeability for the leaching solution.
• Phase 1 vs. Phase 2: Phase 1 focuses on low-cost, surface-level oxide gold extraction; Phase 2 targets deeper, hard-rock gold deposits.
• Infill Drilling: Drilling conducted within a known resource to increase confidence in grade and geological continuity.

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1. Project Status and Construction Progress

Cabral Gold is currently developing its Cuiu Cuiu district project in northern Brazil. The company is focused on a Phase 1 heap leach operation with a target capacity of 3,000 tons per day.

• Completion Status: As of the latest update, the project is over 70% complete.
• Timeline: Mining is scheduled to commence at the end of June, with leaching starting in July. Commissioning is set for Q3, and commercial production is targeted for Q4 2026.
• Infrastructure: A 160-person camp has been established, independent of the exploration team. Despite the heavy rainy season (January–March), the team successfully completed all earthworks and concrete foundations on schedule and within budget.
• Equipment: Most equipment is on-site, including conveyors and the ROM (Run of Mine) area. The ADR (Adsorption, Desorption, and Recovery) plant, manufactured in Perth, Australia, is currently in transit and expected on-site next month.

2. Mining Methodology and Operational Strategy

The project utilizes a low-cost, simplified mining approach:

• Mining Method: Contract mining is employed. The material is "free-digging" saprolite and soil, eliminating the need for drilling, blasting, or crushing.
• Processing: The ore is agglomerated with cement to form pellets, which are then placed on "on-off" leach pads.
• Flexibility: Unlike permanent pads, the on-off system allows the team to adjust cement ratios and stacking heights for each batch (60-day cycle), mitigating risks associated with permeability or recovery issues.
• Logistics: The first open pit is located only a few hundred meters from the processing plant, minimizing transport costs.

3. Financials and Economic Outlook

• Gold Loan: The company borrowed 353 kg of gold (valued at ~$45M USD at the time) from its largest shareholder. Repayment begins in March 2025 over a 39-month term at 10% interest.
• Profitability: With a projected all-in sustaining cost (AISC) of ~$1,200–$1,300/oz and current gold prices, the company expects a margin of approximately $3,000 per ounce.
• Payback: Based on the Pre-Feasibility Study (PFS) and current gold prices, the capital expenditure (approx. $38M) is expected to be recovered within 6 months of production.
• Strategy: The company aims to be self-funding to avoid further dilution of the capital structure, using Phase 1 cash flow to fund the exploration and development of the larger Phase 2 hard-rock project.

4. Exploration and Growth (Phase 2)

While Phase 1 focuses on the oxide cap, the company is aggressively pursuing the underlying hard-rock deposits, which represent 75% of the district's known ounces.

• Resource Expansion: The company has doubled the number of known gold deposits since 2022 (from three to six, with a seventh expected).
• Drilling Results: Recent exploration has yielded record-breaking results, including 9.5 meters at 87.4 g/t gold and 170.6 meters at 2.5 g/t gold (including a 17.8m section at 13 g/t).
• Parallel Operations: The exploration team operates independently from the construction team, ensuring that the "pedal remains to the metal" on resource growth while the mine is being built.

5. Notable Quotes

• "We control an entire district here... we don’t think that determining how much gold is within this entire district lends itself very well to the tried and tested method that 99% of junior companies pursue [dilutive financing]." — Alan Carter, CEO
• "Our pads are all going to be on-off pads... we can modify things as we go along, which is a bit different to most heap leach mines, which are permanent pads." — Alan Carter, CEO

Synthesis

Cabral Gold is transitioning from an exploration-focused junior to a producer by leveraging a low-capex, high-margin heap leach operation. By utilizing a modular "on-off" pad system and focusing on surface-level oxide material, the company aims to generate significant cash flow to repay its gold loan and fund the long-term development of its extensive hard-rock district. The dual-track strategy—maintaining separate teams for construction and exploration—positions the company to scale production while simultaneously expanding its total resource base.