Cabral Gold - Near-Term Cash Flow Unlocks District-Scale Potential in Brazil

• Cabral Gold has an advanced exploration gold project called Cuiú Cuiú in Brazil with 1.2 million ounces of indicated and inferred resources.
• The company is doing a pre-feasibility study focused on the oxides/saprolite zones which extend to 60m depth and do not require drilling/blasting.
• The saprolite material has grades comparable or better than the underlying bedrock. Cabral is permitted to process 5,000 t/d.
• The PFS is targeting production in Q3 2024, assuming financing is secured. The initial capex is expected to be under $100M.
• Recent high-grade drill results at the Machichi target open up a new near-surface target only 500m from the planned MG pit.

About Cabral Gold

Cabral Gold is a junior gold developer focused on the Cuiú Cuiú project in north-central Brazil. Cuiú Cuiú already hosts 1.2 million ounces of gold resources and the company sees district-scale potential. Cabral’s management team were previously involved in the discovery of the nearby TZ gold project, which is currently under construction by G Mining Ventures. The Cuiú Cuiú project has a much larger historical footprint, with over 30 historic placer gold mines across the property.

Interview with President & CEO, Alan Carter

Saprolite Focus De-Risks Development

A key aspect that sets Cuiú Cuiú apart is the extensive saprolite (weathered) zones identified at surface. The saprolite blankets extend up to 60m depth and overlies the bedrock-hosted gold mineralization. Historic weathering has enriched the near-surface material to comparable or better grades than the underlying bedrock.

Cabral plans a two-stage development approach, taking advantage of the high-grade, soft saprolite material first before expanding into the larger hard-rock resources. Focusing first on the saprolite zones significantly de-risks the project, as the soft material does not require drilling/blasting and can be processed more simply via heap leach.

Pre-Feasibility Study Well Advanced

Cabral currently has a pre-feasibility study underway examining heap leach processing of 5,000 t/d of saprolite material. Metallurgical testwork has shown excellent recoveries in the 85-95% range from column leach tests. With such simple metallurgy and minimal mining costs, the project can support very low cut-off grades in the 0.13 g/t range. Obviously, this is much lower than a typical hard rock open pit and allows for a very robust operation.

The company is targeting completion of the saprolite PFS in Q2 2024. Assuming positive economics, a construction decision could be made in Q3 2024. While financing discussions are already underway, the relatively low capex (sub $100M initial estimate) significantly de-risks raising funds.

Recent Drilling Success Points to Resource Growth

While the PFS will focus on only the 1.2M ounce resource, recent drilling suggests strong potential for resource growth. The current resources are centered on high-grade granite-hosted zones, with minimal near-surface saprolite material included. However, the latest round of shallow drilling at targets like Central, MG and Machichi have intersected high-grade oxidized material with results like 30m at 2.6 g/t Au.

One of the most exciting results was from the Machichi zone, which returned 30m @ 2.6 g/t Au from surface. Machichi currently does not have any resources defined but the new drilling traced mineralization over a 900m strike. Better yet, Machichi sits only 500m from the planned MG pit, one of Cabral’s priority targets. Demonstrating additional near-mine resources could significantly enhance the saprolite production profile and overall economics. Investors should expect a steady news flow over the coming months as the drill results are incorporated into an updated resource model.

Major Exploration Upside Remains

While the focus is currently on fast-tracking the saprolite zones into production, the hard rock exploration potential at Cuiú Cuiú is the real prize longer-term. Within the 20km long property, over 30 zones of historic placer workings have been identified but little modern exploration has occurred outside a few main areas. Multiple new bedrock discoveries made in 2021-2022 demonstrate the significant room for additional growth.

The Phase 1 saprolite heap leach mine would generate strong cash flows to support an expanded drilling program. Proving up additional resources would then underpin a significantly larger Phase 2 project mining the higher-grade bedrock deposits. Investors at current levels are essentially getting a free option on the hard-rock exploration upside while the company de-risks and advances the saprolite zones towards production.

Conclusion

With Cabral Gold currently trading at about $25/oz in situ, the company offers a very attractive risk/reward proposition for investors at a historic low valuation. The planned saprolite focus de-risks the technical aspects while also allowing faster permitting/development to achieve initial production. Near-term catalysts like the PFS and ongoing exploration results provide re-rate potential over the coming 6-12 months. More patient investors are further rewarded through exposure to the longer-term hard rock exploration upside across the district-scale land package.