Cabral Gold: 2026 Stage One Production Targets $75M Cash Flow

• Cabral Gold has secured a US$45 million gold loan from Precious Metals Yield Fund, completely eliminating financing risk for its Stage 1 heap leach project in Brazil's prolific Tapajós Gold Province
• The project delivers a 78% post-tax IRR and 10-month payback period at $2,500/oz gold, with current gold prices significantly higher, generating projected annual free cash flow of $75 million USD
• Unlike typical junior mining financings, this gold loan structure avoids equity raises, preserving shareholder value while maintaining full gold price exposure through no hedging requirements
• Construction decision approved with first gold pour scheduled for Q4 2026, just 12 months away, utilizing proven heap leach technology with all-in sustaining costs of $1,210 per ounce
• With 1.2 million ounces of existing resources and only a fraction of 50+ identified targets tested, the company plans aggressive exploration funded by production cash flows to unlock multi-million ounce potential

Introduction to Cabral Gold's Financing Success

In a market where junior gold developers often struggle to secure non-dilutive financing, Cabral Gold Inc. (TSXV: CBR) has achieved what CEO Alan Carter describes as a "monumental step forward" for the company. The announcement of a US$45 million gold loan to fully fund their Cuiú Cuiú heap leach starter operation in Brazil represents more than just another project financing it's a validation of the project's robust economics and a strategic positioning that could transform the company from explorer to producer within 12 months.

Carter, who serves as President and CEO of Cabral Gold, announced the construction financing for the company's Stage 1 heap leach startup project, noting that with gold prices significantly above the $2,500 per ounce used in their pre-feasibility study, the project economics have become even more compelling.

"Obviously with the gold price going up significantly, there's quite a lot been quite a lot of interest in our startup project. As you saw from the PFS study that we announced at the end of July, the economics look very, very strong at $2,500 an ounce. And now we're in gold price environment, which is way above that."

The timing couldn't be better for gold developers, with the precious metal trading well above the base case assumptions that already showed exceptional returns. What makes this financing particularly noteworthy is its structure. The Precious Metals Yield Fund, an affiliate of the Phoenix Gold Fund which is Cabral's largest institutional shareholder, provided what Carter characterized as "an extremely competitive funding package" with no dilution to the capital structure. This relationship-based approach to project finance, combined with the project's strong fundamentals, gave Cabral multiple financing options to choose from ultimately selecting the deal that best preserved shareholder value.

The market had been anticipating some form of equity component to the financing, which Carter acknowledged:

"A lot of these sorts of deals, you have a debt component and then an equity component. I think a lot of people are expecting us to do something similar. There's no equity raise as part of this financing. It's fully funded."

This deviation from typical junior mining finance structures represents a significant win for existing shareholders who won't see their ownership positions diluted to bring the project into production.

Carter emphasized the project's strong economics: "At $2,500 an ounce, the IRR on this project is 74%. So we're very, very pleased." With construction now approved by the board and already underway with ordering long lead items, clearing the site, upgrading infrastructure, and building new bridges, the company expects to be in production in the fourth quarter of 2026 following a 12-month build process.

Interview with President & CEO, Alan Carter

Details of the Gold Loan Package

The structure of Cabral's financing deserves close examination, as it reveals both the confidence of the lender and the flexibility afforded to the company. The gold loan carries a 39-month term with a principal amount of US$45 million, featuring an annual interest rate of 10% with 100% of interest costs capitalized to principal until December 2026. This interest capitalization during the construction and ramp-up period is crucial, as it means no cash payments are required while the company is still spending capital to build the operation.

The repayment structure is equally favorable. Principal payments of 39 kilograms of gold per quarter commence March 31, 2027, with the full amount to be repaid no later than December 31, 2028. When Carter was asked about the 14% of gold production that would go toward repaying the loan over the life of mine, his response highlighted the long-term thinking behind the project:

"14% of the gold will go towards paying down this loan over the life of mine. But we think this initial starter operation is going to continue way beyond the projected mine life as per the pre-feasibility study. The reason for that is because we're seeing a lot more of this oxide mineralization coming up at Cuiú Cuiú. We've got two more of these blankets that weren't included in the pre-feasibility study. I think that 14% of life of mine gold produced will probably go down significantly moving forward."

Perhaps most importantly for a company bullish on gold prices, the loan includes no hedging requirements, no cash sweeps, no cash collateralization, and no offtake agreements. As Carter explained his thinking on this crucial point: "Who knows where the gold price is going to be next week, let alone 12 months time when we're in production. So we want to benefit and be exposed to the upside if the gold price continues to rise."

The actual capital expenditure for the project is even lower than the loan amount. "The actual capex is only $37.7 million here," Carter noted. With the loan providing $45 million, Cabral will have excess capital to maintain exploration momentum. Carter emphasized this strategic advantage: "That's going to allow us to keep our foot on the accelerator in terms of the exploration. So the rigs will continue to turn. We're going to continue to focus on growing the global resource at Cuiú Cuiú."

The profit margins at current gold prices are substantial:

"You're looking at $3,000 margin here, profit margin on every ounce we produce," Carter calculated, referencing the all-in sustaining costs from the pre-feasibility study of $1,210 an ounce. "Now this is just a small starter operation to get us into production. The big prize here is the much larger hard rock project."

Carter put the production scale in perspective 25,000 ounces a year with a $3,000 margin. I mean, you can do the math on that.This translates to approximately $75 million in annual pre-tax cash flow from what he characterizes as a "small starter operation."

The warrant component of the deal is minimal compared to typical junior financings. The lender receives 10 million non-transferable warrants exercisable at C$0.71 per share (a 50% premium to the 5-day VWAP) for 24 months following issuance. This represents potential dilution of less than 5% of the current share structure and only if the share price appreciates significantly above current levels a scenario that would benefit all shareholders.

Exploration Plans & Resource Growth

While many junior miners pivot entirely to construction and operations once financing is secured, Cabral's strategy explicitly maintains aggressive exploration throughout the build period and beyond. This dual-track approach is enabled by the excess capital from the gold loan and represents one of the most compelling aspects of the investment thesis. The company currently has three rigs turning, but once in production, Carter would like to expand to ten rigs, noting that with $75 million in annual free cash flow, "it opens all sorts of doors." The scale of the exploration opportunity becomes clear when examining the district's history: historical placer gold production at Cuiú Cuiú was 10 times greater than that from Tocantinzinho (Brazil's third-largest gold mine), while the gold-in-soil anomaly is seven times larger than Tocantinzinho's pre-discovery footprint pattern recognition from Carter's direct experience discovering that major deposit in the same geological district.

Recent drill results support the case for significant resource expansion, with intercepts of 11 meters at 33 grams and 12 meters at 27.7 grams well outside current resource envelopes. The current resource base stands at approximately 1.2 million ounces indicated and inferred, last updated in September 2022 when gold was trading around $1,800 per ounce. The company has drilled 20,000 meters since then and plans to drill at least another 20,000 meters in the next six to nine months, with a resource update planned for late next year. The geological evidence is compelling, with boulder fields averaging 90 grams per tonne in a dozen different parts of the project, while the company has already made four new gold discoveries in the last three years, demonstrating consistent exploration success.

Carter articulated his long-term vision:

"I've always maintained to you that Cuiú Cuiú is going to be a multi-million ounce district. This funding of the starter project really gives us the ability now to really go to town and drill all these targets off."

The confidence stems from his professional assessment that it's the largest gold district he's encountered in his career a statement carrying substantial weight from someone with a track record that includes the Tocantinzinho discovery. With 50+ identified targets and only a fraction tested to date, the exploration upside represents significant optionality for shareholders, all funded by production cash flows rather than dilutive equity raises.

Future Prospects & Economic Considerations

The economics of the Stage 1 heap leach operation are compelling in isolation, but the real value proposition lies in what it enables for Stage 2 and the broader district potential. Understanding this progression is essential to appreciating Cabral's full investment case. Carter explained the staged approach:

"Once we've grown that hard rock resource to a certain size, probably in the order of two to two and a half million ounces, we'll then be scoping out, I think we'll most likely be doing a PFS on that much larger stage two project."

The Stage 1 operation serves a specific strategic purpose mining near-surface heap leach material that is free digging, leaches extremely well, and has very low mining and processing costs without requiring crushing and grinding. In parallel, exploration drilling will target the much larger hard rock resource, with constant drill results expected as the company works to define the bigger prize.

The location provides additional advantages often overlooked in project economics. Cabral sits right next to Tocantinzinho, the third largest gold mine in Brazil, which Carter was involved in discovering. This proximity means access to experienced labor, established service providers, existing infrastructure, and potential synergies all factors that reduce risk and potentially enhance project economics. The historical context supports Carter's confidence in the district: the Tapajós Gold Province was the site of the largest gold rush in Brazil's history, producing an estimated 30 to 50 million ounces of placer gold between 1978 and 1995, with Cuiú Cuiú being the largest area of placer workings, producing an estimated 2 million ounces historically.

When asked about capital allocation for the substantial free cash flow, Carter was clear about priorities:

"A large chunk of that will go into exploration. I think it would be difficult for us to spend 75 million US dollars just in exploration per year at Cuiú Cuiú, but we're certainly going to be spending a significant chunk of that in exploration."

This exploration-first mentality, backed by production cash flows, creates a self-reinforcing cycle where production funds exploration, exploration grows resources, larger resources support larger operations, and larger operations generate more cash flow for additional exploration a growth strategy that doesn't depend on capital markets or dilutive equity raises. Carter's assessment that this is "the largest gold district I've ever come across in my career" isn't hyperbole from an inexperienced promoter, but rather the evaluation of the geologist who discovered one of Brazil's largest gold mines on the adjacent property.

Investment Thesis for Cabral Gold

• With no hedging requirements and all-in costs of $1,210/oz, every $100 increase in gold prices adds $2.5M to annual cash flows, providing maximum operating leverage during a structural gold bull market driven by central bank buying and monetary system fragmentation.
• Located adjacent to Tocantinzinho (Brazil's third-largest gold mine), Cabral benefits from established infrastructure, skilled labor pools, and lower construction/operating costs in local currency while earning USD revenues, with all major permits already secured.
• Production cash flows of $75M annually eliminate the need for dilutive equity raises to fund both aggressive exploration across 50+ targets and potential Stage 2 development (targeting 2-2.5M oz hard rock resource), creating a virtuous cycle of discovery and value creation.
• Trading at approximately C$130M market cap versus $74M NPV on Stage 1 alone (before Stage 2 or exploration upside), the company offers asymmetric risk/reward with multiple re-rating catalysts including production commencement, resource growth, and potential major discovery across largely untested district.
• Historical placer production 10x larger than adjacent Tocantinzinho, gold-in-soil anomaly 7x larger than Tocantinzinho's pre-discovery footprint, and recent high-grade intercepts (11m @ 33 g/t) validate management's thesis that Cuiú Cuiú represents a multi-million ounce district-scale system with CEO Alan Carter's direct discovery experience in the same geological setting.

Cabral Gold's $45 million gold loan financing represents more than just another junior mining deal it's a template for how developers can advance projects in a shareholder-friendly manner while preserving optionality and exposure to commodity price upside. By securing non-dilutive financing with no hedging requirements, Cabral has positioned itself to benefit fully from its operational leverage to gold prices while funding aggressive district-wide exploration that could reveal a multi-million ounce system.

The combination of near-term production (just 12 months away), exceptional project economics (78% IRR with 10-month payback), proven management with direct discovery experience in the same district, and largely untested district-scale exploration potential creates a compelling risk-reward proposition. As Carter noted, the financing "takes away all the financing risk essentially. So construction has been approved by the board. So that's underway."

For investors seeking leveraged exposure to gold prices with a clear catalyst path, minimal dilution risk, and significant blue-sky exploration upside, Cabral Gold offers an intriguing opportunity at the intersection of near-term production and long-term district potential. The company's success will ultimately be measured not just by the ounces produced from the heap leach operation, but by the discoveries made and resources defined across the broader Cuiú Cuiú district in the coming years discoveries that will be funded by production rather than dilutive equity raises.

Carter's enthusiasm about the district potential is infectious but grounded in geological evidence and personal experience: "But it's yeah, it's going to be very, very interesting moving forward." With construction underway, financing secured, and an experienced team in place, the next 12 months will be transformative for Cabral Gold and potentially rewarding for shareholders who recognize the value proposition before the market fully appreciates the company's transition from developer to producer with district-scale exploration upside.

Macro Thematic Analysis

The gold market is experiencing a fundamental shift driven by multiple converging macro factors that create an exceptionally favorable environment for junior gold producers like Cabral Gold. Central banks globally have become net buyers of gold for the first time in decades, with purchases exceeding 1,000 tonnes annually since 2022 a trend reflecting declining confidence in dollar hegemony and growing concerns about sovereign debt sustainability. The BRICS nations are actively pursuing alternatives to dollar-denominated trade settlements, with gold serving as a neutral reserve asset acceptable to all parties.

Simultaneously, persistent inflation combined with the likelihood of extended deficit spending in major economies has reduced real interest rates, eliminating the traditional opportunity cost of holding non-yielding gold. The U.S. federal debt exceeding $35 trillion, coupled with structural deficits of $1-2 trillion annually, suggests monetary debasement remains the path of least political resistance. Gold prices above $2,600 per ounce reflect not just investment demand but a fundamental repricing of fiat currency risk.

For gold mining equities, this environment creates exceptional operating leverage. A company producing at $1,210 per ounce all-in sustaining costs earns approximately $1,400 in margin per ounce at current gold prices a 115% margin that flows directly to free cash flow and shareholder value. Each $100 increase in gold prices adds $2.5 million annually to a 25,000-ounce producer's cash flow, demonstrating the exponential returns available to low-cost producers.

Junior producers specifically benefit from the current market structure in several ways. Major gold producers have depleted their project pipelines through a decade of underinvestment in exploration, making quality junior assets increasingly valuable acquisition targets. The cost to discover and develop new ounces has increased dramatically, while most major discoveries occurred decades ago and are now approaching depletion. This creates a supply shortage that cannot be quickly remedied, supporting sustained higher gold prices.

The financing Cabral secured illustrates another advantage of the current environment: specialty lenders with conviction in gold prices are willing to provide attractive non-dilutive project financing to quality developers. This availability of alternative capital sources allows juniors to avoid the heavily dilutive equity raises that historically destroyed shareholder value during project development. The no-hedging structure of Cabral's loan demonstrates lender confidence that gold prices will remain elevated, allowing borrowers to benefit from price appreciation while servicing debt obligations.

Brazil specifically offers jurisdictional advantages often overlooked by investors focused on "safe" mining jurisdictions. While permitting can be lengthy, once obtained, mining licenses provide legal certainty and protection. Labor costs are significantly lower than in developed markets, as are construction and operating expenses. The country has established mining infrastructure, skilled labor pools in mining regions, and a long history of successful gold mining operations. Currency dynamics also favor producers, as a weaker Brazilian real reduces local costs while revenues are realized in U.S. dollars, enhancing margins.

The exploration upside Cabral possesses becomes increasingly valuable in this environment. With major producers unable to organically replace reserves and acquisition premiums for quality ounces continuing to escalate, district-scale land positions in productive gold belts represent substantial option value. Each new discovery and resource expansion materially increases enterprise value at minimal cost when funded by production cash flows rather than equity dilution.

Perhaps most importantly, the current gold bull market appears fundamentally different from previous cycles driven primarily by jewelry demand or financial speculation. The participation of central banks as structural buyers, the fragmentation of the global monetary system, and the fiscal trajectories of major economies suggest gold's role as a monetary asset is being permanently repriced higher. For leveraged gold producers entering production during this repricing, the potential returns could be substantial and sustained rather than cyclical.

TL;DR

Cabral Gold secured $45M in non-dilutive financing to build a Brazilian heap leach gold mine delivering 78% IRR and $75M annual cash flow by Q4 2026, with all-in costs of $1,210/oz providing $1,400+ margins at current gold prices, while production funds aggressive exploration of a district-scale opportunity where management previously discovered Brazil's third-largest gold mine and recent drilling returned intercepts like 11m @ 33 g/t gold outside existing resources, creating a rare combination of near-term production catalyst, exceptional economics, zero financing risk, and significant blue-sky exploration upside in a self-funding growth model that eliminates future dilution.

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