Cabral Gold (TSXV:CBR) - Positive PFS Shows Low-Cost, High-Return Gold Starter Operation

Interview with Alan Carter, President & CEO of Cabral Gold Inc.

Our previous interview: https://www.cruxinvestor.com/posts/cabral-gold-tsxvcbr-near-term-production-potential-in-brazil-aiming-for-2026-startup-5924

Recording date: 23rd October 2024

Cabral Gold has unveiled a strategic Pre-Feasibility Study (PFS) for its Cuiú Cuiú oxide gold project in Brazil's Tapajós region, presenting a compelling pathway to self-funded growth through a low-capital starter project with robust economics.

The PFS outlines a modest initial capital requirement of US$37 million for a 2,000 tonnes-per-day operation targeting oxide resources. At current gold prices around $2,700/oz, the project demonstrates exceptional economics with a post-tax IRR exceeding 80% and potential annual profits of approximately US$34 million. Even at a more conservative gold price of $2,250/oz, the project maintains a strong 47.3% IRR.

Key to the project's attractive economics is its simplified mining and processing approach. The operation will exploit a 60-meter thick weathered cap of oxidized material that requires no drilling or blasting, significantly reducing mining costs. Additionally, the material's clay-like nature eliminates the need for conventional crushing and grinding circuits, substantially lowering both capital and operating costs. All-in sustaining costs are projected at just over $1,000/oz in the initial years.
While the current PFS contemplates a 4.5-year mine life, it incorporates only 25% of the available indicated and inferred oxide resources. The company has identified significant potential to expand the oxide resource base, suggesting a considerably longer operational life.

The strategic rationale centers on generating consistent cash flow to fund exploration across Cabral's district-scale property, which hosts 50 identified gold targets. The project's projected US$34-35 million annual profit would enable aggressive exploration without relying on equity markets, potentially supporting 5-6 drill rigs operating year-round.

The property's exploration potential is highlighted by its location adjacent to G Mining's Tocantins mine (set to become Brazil's third-largest gold mine) and historical placer production that exceeded Tocantins by a factor of ten. Recent exploration success, including intercepts of 11 meters at 33 g/t gold, underscores the district's potential.

The company has outlined a clear timeline to production, targeting construction decision, 12-month construction period and mid-2026 initial production. For investors, Cabral presents a compelling opportunity with near-term catalysts including project financing arrangements over the next six months and ongoing exploration results. The project's low technical risk, modest capital requirements, and clear path to financing reduce execution risk, while the district-scale exploration potential offers significant upside.

The macro context further supports the investment case, with the Tapajós region emerging as a major gold district following G Mining's successful Tocantinzinho  mine construction. Historical production of 20-30 million ounces of placer gold from the region suggests significant potential for additional discoveries.

CEO Alan Carter summarizes the opportunity: "$35 million of cash flow profit a year will allow us to get very aggressive with the drill program. It's going to be tremendously exciting." With strong project economics, significant exploration potential, and a strategic approach to self-funded growth, Cabral Gold offers investors exposure to a developing gold district with multiple value drivers.

View Cabral Gold's company profile: https://www.cruxinvestor.com/companies/cabral-gold

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