Cabral Gold (TSX-V: CBR) - Technical Analysis

Cabral Gold Inc. is a mineral exploration company focused on gold and copper. The company's key assets include the Cuiú Cuiú Project in Northern Brazil, the Tapajos Region, and the Bom Jardim project. The company was founded in 2016 and is headquartered in Vancouver, Canada.

Merlin Marr Johnson caught up with Alan Carter, President, CEO, and Director, Ruari McKnight, Country Manager, Brazil and Willie Hughes, VP Exploration, Cabral Gold. The company’s management team has been involved in 5 grass roots gold discoveries in Brazil, one of which is in production and two more are scheduled to enter construction during 2022.

Dr. Carter was a Co-founder at Peregrine Metals Ltd. and Cuprum Resources Ltd which were both acquired by larger companies. He currently serves as a Director and Chairman at both Fremont Gold Inc. and Altamira Gold Corp. His educational credentials include a B.Sc. degree in Geology from the University of Nottingham, U.K., and a Ph.D. degree in gold geochemistry and structural geology from the University of Southampton, U.K. He also co-founded Magellan Minerals Inc. which was acquired by Anfield Gold Corp. in 2016 and is now part of Equinox Gold. Alan is the largest shareholder in Cabral Gold with a $1.7M investment.

Mr. McKnight worked in gold and base metal exploration for Mt. Isa Mines Exploration Pty Ltd (MIMEX) between 1993 and 1996 before moving to South America. He joined Serabi Mining Plc in 2003 as the CEO, overseeing the management of the Palito gold project including exploration planning, successful plant commissioning, and project generation. He was a founding partner of Dourave Mineracao & Exploracao and is a permanent resident of Brazil. His educational credentials include an Honors degree in Geology along with a Commerce degree in Accounting and Finance. He is also the treasurer of the SIMEOESPA (Syndicate of Miners of West Para).

Company Overview

Cabral Gold is a publicly-traded company focused on advancing its flagship, district-scale Cuiú Cuiú Gold Project located in the Tapajos region of northern Brazil. The company is in the process of growing its existing resource base through trenching, sampling and drilling. Magellan Brazil is the company’s subsidiary. It is listed on the Toronto Stock Exchange (TSX-V: CBR), the OTC Markets (OTCQX: CBGZF), and the Frankfurt Stock Exchange (FRA: C3J).

The company has already drilled 2 gold deposits at Cuiú Cuiú that currently feature 1Moz of Inferred and Indicated resources. The most recent resource update was done in 2018. Since then, the company has drilled around 30,000m and made several new discoveries. It is looking to drill an additional 25,000m in the first half of 2022. The company has 4 rigs currently employed at the project. 

Last year, Cabral Gold made 3 new gold discoveries. It plans to drill these discoveries and test additional targets within the district. The Company has identified 43 other targets within a 5-6km radius of the 2 main gold deposits. The Cuiú Cuiú project is located 20km northwest of G Mining’s TZ project which is scheduled to enter construction in mid-2022 and will be Brazil’s third largest gold mine.

The Tapajos region in northern Brazil is the site of the world’s largest-ever Gold Rush. Around 20Moz - 30Moz gold was extracted from the streams and the rivers in the region during the 1980s. The Cuiú Cuiú area was the largest of over 100 areas where gold was recovered from streams during the Gold Rush of the 1980’s.

The Central and MG Deposits

Cabral Gold mainly utilized soil sampling to discover the Central and MG Deposits. These 2 deposits were among several soil anomalies identified by the company and several additional anomalies require drilling. Most of the project area was originally covered by a big lake which deposited 20m of mud and sand and may be concealing several additional deposits.. 

All of the company’s host rocks are intrusive. These rocks range in composition from diorites to granites and are of Proterozoic age (2 Billion years old). 

The Central and MG deposits are orogenic gold deposits or mesothermal gold deposits which were originally formed deep in the Earth’s crust. Erosion has subsequently resulted in the exposure of these deposits at surface but they are likely to continue to considerable depth. The Central deposit is a north-west trending zone with a maximum width of 100m. This deposit is sub-vertical with a steep dip to the northeast and has so far been drilled to 300m depth. 

The MG deposit is an east-west trending body located 5km to the southeast. It trends east-west and has many similarities to the Central deposit in terms of host rocks and alteration. It is however a narrower body ranging between 30m-50m width. Both the MG and Central ore bodies are in excess of 1km long and still open in several directions and at depth.

Orogenic deposits are known to extend very deep into the ground. The company has drilled up to a depth of 350m, however, the actual depth extent of these deposits is yet to be determined. 

Both the Central and MG deposits at Cuiú Cuiú are present in the granite have experienced millions of years of erosion, leading to the formation of flat-lying gold-in-oxide blankets in the unconsolidated mud, sand, and soil. These oxide deposits were only recently identified, and three of these oxide gold deposits have been identified since April 2021. 

The 2018 resource estimate for the MG and Central gold deposits at Cuiú Cuiú is in all likelihood a very conservative estimate. A significant number of high-grade drill results returned prior to 2018, were not included in the resource estimate. No modelling of the high-grade zones in both deposits was completed and as a result approximately 500,000oz of higher grade material that was indicated from the drilling, was not included in the 2018 resource estimate. 

Traditionally with gold deposits, resources are calculated using a top cut, which roughly translates to a maximum grade. This results in  the grades above the top cut level being  adjusted downwards to the top cut level. This is done because the higher grades are often sparsely present and are regarded as statistical outliers. For example if a top cut for a deposit was designated as 10g/t gold, a drill hole which actually intersected 5m @ 25 g/t gold would become 5m @ 10 g/t gold for the purpose of the resource estimate. Generally, the top cutting process results in about a 5-10% loss in the total gold in the resource that is actually indicated by the actual drill results.

In the case of Cabral Gold’s resource estimate, the company lost about one-third of its gold through the top-cutting exercise, essentially most of the high-grade material. As a result,- around 500,000oz of high-grade material was’’t included in the resource estimate resulting in a  very conservative resource.

Since 2018, the company has carried out extensive drilling, approximately 30,000 metres. A lot of this drilling is detailed infill drilling which is targeted towards defining the high-grade zones. The drilling to date  has demonstrated that these zones continue along strike length and down dip. The company’s key objective from the current drill program is to develop separate wireframe models for the higher-grade vein zones within both deposits. 

The wireframe modeling will enable Cabral gold to develop a more robust geological model and a resource estimate that includes all of the high grade material at the MG and Central gold deposits. Additionally, this will allow the company to model both the low-grade envelopes and high-grade zones separately. 

Infill drilling at the Central and MG deposits is already returning some surprises with a significant extension recently identified on western end of the MG deposit together with a series of narrower parallel zones, notably the 104 zone which is located 50m in the footwall of the MG deposit.  

But perhaps the most significant aspect of the infill and follow drilling at both the MG and Central deposits has been the identification of extensive gold-in-oxide mineralization in unconsolidated soil and muds and sands overlying both the MG and Central deposits and at another target called PDM. 

Recently Discovered Gold-in-Oxide Deposits; a Potential Game-Changer

The original drilling at both the MG and Central gold deposits was designed to test the vertical extent of both mineralized zones at depth. As a result angle holes were drilled that were located some distance from the mineralized zone. This meant that the weathered material lying close to surface directly above the MG and Central gold deposits was never adequately tested.

Recent infill drilling and the completion of multiple drill holes on individual sections through both deposits, has revealed a significant amount of gold in the soft overlying soil, sand and mud cover, resulting in what the Company has termed a “gold-in-oxide” blanket.  

The first of these gold-in-oxide “blankets” was identified above the MG gold deposit in April 2021 and Cabral has subsequently drilled 80 vertical RC holes and defined a blanket which is currently 40 hectares in size and still growing. The best drill result in this blanket to date is 60m @ 3.5 g/t gold. Whilst the Company has not yet released a resource for the initial blanket at MG, it will likely contain a significant new gold resource, and all of this cover material was assumed to be barren during the 2018 estimate.  

The Company followed this up in August 2021 with the discovery of a second gold-in-oxide blanket 6.5km NW of the first blanket at MG. This second blanket is currently 30 hectares in size and similarly has some excellent results in soft weathered soils and sands including 40m @ 2.2 g/t gold.  However, unlike the blanket at MG, thus far at least, an underlying primary gold deposit in the granitic rocks has not been identified. That was until December 2021 when Cabral started reporting the results of initial holes into the granite at PDM below the blanket. 

To cap things off, in late January 2022 Cabral announced the identification of a third gold-in-oxide blanket. This one is above the Central gold deposit and whilst drilling is only in the initial stages drill results to date include 84.9m @ 0.7 g/t gold, all of which is soft oxide material.

Whilst the Company has not yet reported any resources for any of the three new oxide gold deposits, Cabral has sent 450kg of material for metallurgical test work at the Kappes Cassiday lab in Reno Nevada. This lab is the preeminent laboratory for heap leach metallurgical testing and results are expected in April-May 2022.  

Since the oxide material is all soft and unconsolidated, it would probably not require any drilling or blasting and the fact that it is also located on surface should mean that mining costs are very low. Similarly, it will not need any crushing or grinding implying low processing costs and if the oxide material is amenable to heap leach recovery of the gold the all in costs on a per ounce basis will likely be very low.  

If the final metallurgical results expected in April-May are positive, then this may open up an interesting pathway to near-term gold production for Cabral, since the initial capital costs for a heap leach operation are likely to be very low and a fraction of what a large hard rock operation would be.  A mining operation focused initially on this hard rock material will be simple and most likely highly cost-effective with the potential to generate significant revenue. Following the receipt of the metallurgical test results on the oxide material, the Company is likely to complete a scoping study on the oxide material and could be making a construction decision on a heap leach operation targeting the oxides as early as Q4 2022. 

The PDM Discovery

Cabral Gold’s PDM discovery is located 2.5km NW of the Central gold deposit and is one of the most exciting recent new discoveries within the Cuiú Cuiú project area. . Following the discovery of a second gold-in-oxide blanket at PDM, Cabral’s exploration team turned its attention to the source of all that gold in weathered oxide material and in December 2021 released the initial drill results from four holes drilled in to granitic rocks below the oxide blanket.

These results included 22.4m at 4.8 g/t gold, and a follow-up hole released in January which was drilled 120m further to the north returned 11.9m @ 3.3 g/t gold. These results suggest the presence of a significant new gold deposit and further drilling is currently in progress at PDM aimed at determining the size of the new deposit.

The Machichie Zone

The Machichie zone is a discovery that was made 18 months ago and is a primary zone of gold mineralization which is located 500m north of the MG gold mineralization. The mineralized body currently extends 500m along strike but recent trench results released in January 2022 include 5m @ 8.3 g/t gold from an area 300m west of the western limit to the mineralized zone. These results suggest that the mineralized zone could be significantly larger than originally thought. Additional trenching is in progress, with drilling planned for Q2 2022.  

Drill Rigs

Cabral Gold had 5 drill rigs operating for most of 2021 but during this year’s rainy season, the company has reduced the number of rigs to 4. However, the company is looking for a small portable rig to bring back the number of drill rigs to 5 in the near future.

The Company is currently drilling at the MG and Central gold deposits, as well as the recent PDM discovery, and is also trenching at the new Machichie zone.  In addition to these ongoing drill programs, the Company is also planning on testing a number of regional targets at Cuiú Cuiú during 2022. 

Tenements 

The company has aa series of exploration tenements at Cuiú Cuiú. The two central tenements are in the process of being converted to  mining tenements and contain the MG and Central gold deposits as well as the new discoveries at PDM and Machichie.  Additional exploration work is however planned and required on the peripheral claims prior to April 2023. 

The company has identified a number of exciting targets on these peripheral claims including the Alonso and Tracaja targets. The target at Alonso  features boulders on the surface that have average grades of 91g/t, and similarly boulders on surface at the nearby Tracaja target average 74 g/t gold. Thus far the source of these boulders has not been identified but more drilling is planned.

Assay Results

The current assay turnaround time in Brazil is between 4-6 weeks. The longer assay times are due to the covid situation and but  is expected to be temporary. Whilst this is longer than normal, turn-arorund times for assays in Brazil are considerably better than most places in North America at the moment.  

Ongoing Operations 

Brazil observes frequent rain during the rainy season between November and April, which can pose logistical challenges. Unlike most other places however, drilling does occur year round. The company currently has 4 rigs operating, 3 of which are under contract from Energold Drilling. Cabral uses man-portable rigs that can be transported through virtually any terrain.. The platform size for these rigs is around 5m x 6m and the rigs can be purchased in a modular format. This enables the company to carry out diamond drilling throughout the year without problems.

The company also owns a portable RC rig which is track mounted and has a fleet of heavy equipment to help with the operation’s logistics. The company is currently looking for a fifth rig and is planning to drill at least 25,000m during 2021 which should result in a strady stream of drill results as the Company continues to evaluate this exciting district.

2022 Targets and Beyond

Through 4 drill rigs, the company is currently generating a massive amount of drill data. A major part of this is focused on infill drilling of the two known deposits and establishing the size of the new discoveries at PDM and MG, along with the testing of regional targets.

If the metallurgical test results for the recently discovered gold-in-oxide deposits prove positive, the Company will most likely complete a Scoping Study later this year on  the oxide material.

By the end of this year, the company is also looking to update the global resource estimate for the entire Cuiú Cuiú district, encompassing maiden estimates for the new discoveries at PDM and Machichie, as well as updated estimates for the Central and MG deposits. 

Brazil’s Mining Landscape 

Brazil has observed several positive developments in terms of the permitting process and changes in the mining law in recent years. These changes have attracted more foreign companies to Brazil’s resource sector. Major miners which are currently producing gold in Brazil include Yamana, Anglogold Ashanti, Kinross, Lundin Mining and Equinox Gold. The geology of Brazil remains highly prospective and is largely unexplored, and as a result, new discoveries are anticipated during  the next 10-20 years.

Operating in Brazil has also been significantly cheaper in recent months due to the devaluation of the country’s currency. A highly-skilled workforce further makes Brazil an attractive prospect, as does a climate which allows exploration work all year round. Cabral is in the vanguard of foreign companies that are active and with 1Moz already defined and an aggressive drilling program in progress, Cabral is poised to be part of the modern-day gold rush in Brazil.  

‍To find out more, go to the Cabral Gold website