Cabral Gold (CBR) - Blanket of Gold Dramatically Changes Everything

Cabral Gold is a Gold exploration company that has an advanced Gold district scale project in Brazil. The company’s key asset is the Cuiú Cuiú project in which it has 100% interest and is located approximately 20km NW of Eldorado Gold's Tocantinzinho project

We caught up with Alan Carter, President & CEO of gold explorer Cabral Gold who is hunting for Gold in Brazil. We talked to him about a recent press release where they mentioned an ‘Oxide Blanket’ and discussed the implications for the company in terms of strategy and the need to raise capital and start production earlier.

Company & Progress Overview: 10x Growth in 2020

Cabral Gold has already defined two Gold deposits that have a million ounces. Both deposits are open at depth and within an 8km radius of the two deposits, which are 5km apart, there are 43 other targets. The company has just identified a very large oxide blanket on one of these two deposits and thinks there may be others in the vicinity.

This is a district scale project located in the Tapajos region, which is the site of the world’s largest Gold rush in history and this region produced 20-30 millions ounces during the 1980s. The Cabral Gold project area is the site of the largest historic Gold camp.

We’ve followed this story for a few years now and it has been difficult to get it off the ground for the company in terms of getting the market interested. When Gold started picking up, they were able to raise capital and had a spectacular year last year and became the second best performing mining stock on the TSX-V exchange in terms of liquidity, growth in market cap and share price.

Understanding the Term "Oxide Blanket" & Why They Only Found it Now

Cabral Gold has 2 primary Gold deposits so far, 2 hard rock Gold deposits that were formed probably about 2Bn years ago, within a granitic coarse rock as a result of hot water flushing through cracks. They think there could be another 6, 7 or 8 of those deposits within their project area. Within the last few weeks, it's become apparent that on top of one of those, there is a flatline zone, which is actually a separate deposit. That flatline zone or blanket, has developed over millions of years from the erosion of the underlying primary deposit, which is a vertically dipping, or sub-vertical dipping body of 30m to 50m wide. This has been weathering over millions of years, and the Gold is dispersed into the overlying sand and sediments and mud and it's formed a blanket and it is an oxide. There is no sulphide material and most Gold ores from most Gold mines are in hard primary rock and are associated with sulphides. These rocks are crushed and pulverised to liberate the Gold through gravity process and also a chemical process in a processing plant.

In an oxide deposit, the costs are much lower in terms of mining and processing as it's much easier to get the Gold out and because this is at surface, it’s highly significant. The surface sands were previously assumed to be sterile, so in the last resource estimate in 2018, this was waste. They now know that all that material, which was a cost, is now a separate deposit, and its ore. Last week, Cabral Gold reported that they have 60m at 3.5g within this blanket zone.

The underlying deposits are sub-vertical, quartz veins in the middle, very high-grade and are surrounded by a low-grade halo within the granitic rock. The deposit that they've identified this blanket above is an East-West trending body where they have an inferred resource. When they originally drilled and discovered it, they were drilling on section lines every 100m north-south section lines and were putting 1 hole. They knew that there was some mineralization in the oxide material above it but didn't realise that it was a big blanket zone because they had no holes in that section.

The current drill programme has the objective of drilling more holes into the underlying high-grade portions of the underlying deposit and in that process, they have more holes along the same section. That meant that they could get some idea of what's happening in the north-south dimension and they are much closer to the projected location of the underlying deposit with the thickest and highest grade.

Change to Strategy & Implications on Timing, Studies, & Processes

This blanket has the potential to create meaningful revenue for the company and they now have 3 rigs currently working on the project. There are indications of other blankets from the historic drill database in 5 other areas and then may be more than that. Cabral Gold has 2 deposits here, with 43 others in close proximity which were weathering at the same rate over millions of years, so there should be others.

The identification of this blanket will add a lot of oz to the overall endowment within the district. It is a separate deposit sitting on top of the underlying primary deposit at MG but it will add a lot of oz.

It is going to be very cheap to mine as there's no drilling or blasting required compared with hard rock deposits. The processing cost is also low, and if the surface material in mud, sand and soil is all mineralized, this can extend the pit depth deeper so there are more oz coming in at the bottom as well as the top.

Now there is an opportunity to get into early revenue, it gives Cabral Gold the option to get into production much more quickly, potentially, within 12 months or perhaps even sooner than that. There is a big difference in terms of exploration too. Until now, Cabral Gold has been looking for zones that are sub vertical dipping 30-50m, maybe perhaps 100m wide, probably blind zones which on surface are 30m-50m wide, perhaps a kilometre long. A blanket will have a minimum footprint of 400m to 500m wide, extending from surface to say 50m deep, so it is completely different. The drilling is much shallower than the underlying hard rock deposit, the holes are much shorter so it's faster, quicker, cheaper as the material is soft.

Cabral Gold already has the mining permits over this area with trial mining licences over this permit. They need to get the environmental permits approved but have all the environmental applications there. All work has been done and the Environmental Impact Assessment has already been submitted for an open pit.

Financing it All: Cash Positioning & Near-Term Raise

Cabral Gold needs to raise a little bit more money as it has about $3.2M in the bank right now. The plan to do a raise over the next 2 or 3 months.

The 2 trial mining licences that Cabral Gold has covers the area of the blanket and allows extraction of 100,000t of ore per year. There is a possibility they could add additional trial mining licences to that. In Brazil a trial mining licence is an intermediate step to having a full mining licence.

The Pitch to Market: Positioning, Potential, Scale, Team Experience

The market pitch is that Cabral Gold has district scale opportunity to hard rock gold deposits with lots of upside and high-grade potential, but also has the potential of a series of near surface oxide blankets that could be exploited very quickly and cheaply in the near term.

Cabral Gold has the team to do this work with a dedicated team of geologists and over 100 people on site. Cabral Gold has been involved in the discovery of 5 Gold deposits in Brazil and Cuiú Cuiú is the most exciting as it was the largest Gold camp during the Gold rush, so it should contain more primary Gold in the underlying hard rock than anywhere else.

Ensuring Growth & Little Dilution: Control VS Market Dynamics

The Cabral Gold shares have seen a little bit of a bump recently and the company is watching the price and the market to make a decision as to when to raise more money. Alan Cater is the largest shareholder in the company, having put $1.7M of his own money into it. He then put $200,000 into the last financing and $300,000 into the financing before that so is well aligned with shareholders. When the time is right, they will raise some money. They have $3.5M now so are not rushing but at some point this year they will have to raise some money to take advantage of what they've just discovered.

To find out more, go to the Cabral Gold Website