Argus Research Initiates Equity Report Coverage on Cerrado Gold (TSXV: CERT)
NEW YORK, July 15, 2021 /PRNewswire/ -- Argus Research, an independent investment research firm, has launched Equity Report coverage on Cerrado Gold (TSXV: CERT)
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Excerpts & Highlights from the Report as conveyed by Argus Analyst Steve Silver, follow:
Cerrado was founded in 2017 on the basis of the MDC opportunity in Brazil, and acquired the newly producing MDN mine in March 2020. The company went public in 1Q21. Cerrado's strategy is to generate cash flow from the MDN mine in Argentina that will support its exploration efforts at both sites. In 1Q21, the company boosted gold production by 45% from the prior quarter and lowered production costs despite the impact of COVID-19 in Argentina, which resulted in lost operating days. Because of the pandemic's impact on the ramp up in production and costs, management expects production of 45,000 ounces at a cost of $1,100 per ounce, and free cash flow of $10-15 million in 2021.
Lastly, we note that both the MDC and MDN projects benefit from favorable topography and strong local infrastructure. In Brazil, Monte do Carmo has access to reliable power lines, water supplies, and skilled labor, and is located near a national airport. In addition, the project has obtained permits covering 58,000 hectares (nearly 150,000 acres). In Argentina, MDN is accessible from nearby ports, and although airport and highway transportation are not in the immediate vicinity, a gas pipeline runs parallel to the highway and groundwater is readily available.
ANALYST COMMENTARY ̶ EARNINGS (Click here to view Full Argus Equity Report):
Importantly, we expect the new PEA for the Brazil project to enable Cerrado to secure financing on favorable terms. The development of this mine will be capital-intensive, requiring investment of $130-$150 million. However, if the new PEA indicates an internal rate of return in line with the 76% projected in the initial report, Cerrado should be able to choose among various financing structures that would not require a dilutive equity offering. We expect this to be the company's preferred route. We note that the management team holds a roughly 35% ownership stake, and did not use equity to fund the MDN acquisition.
About Cerrado Gold (TSXV: CERT) www.cerradogold.com
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About Argus Research Corp. Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934) ̶ providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and pre-IPO research. In addition, Argus now provides sponsored research solutions for small & mid-cap companies seeking coverage. Our Institutional Asset Management, Bank Trust, sell-side advisor and self-directed investor clients value Argus's proprietary equity research methodology, analysis and commentary. Argus's Equity Research & earnings estimates are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.
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Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.
SOURCE Argus Research
Company Codes: TorontoVE:CERT
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