Cabral Gold on Commercial Production, Phase 1 Expansion, and a Six-Deposit Resource Update

0:00This podcast

0:25Alan Carter: features Alan Carter.

0:30Alan Carter: Commercial production is targeted this quarter with a global resource update promised by year-end. We can also add a$45 million Canadian strategic investment from Peruvian miner Apolliana. And the company has been publishing high-grade drill results from the help from a six-drill rig campaign. Cabral Gold is up 2x this past year. President and CEO is Alan Carter. Alan, welcome to Mining Stock Daily. Hi, Michael. Thanks for having me on. uh alan uh for listeners who are new to the story give us a short version what is the tapajos gold province in brazil who's there and how does gabriel fit in um okay well the tapajos gold province in northern brazil michael is the site of the world's largest ever gold rush anywhere um on this planet so back in the 1980s there were about a million people that rushed into this part of Brazil.

1:27It's the southwestern corner of Pará State, and they were recovering gold from the streams. And it's quite a big area. It's about 250 kilometers across. There's a whole series of placer camps here. And like all gold rushes, once the alluvial gold or the placer gold had been recovered, or most of it had been recovered, folks went back to what they were doing before, or at least a lot of them did. But the hard rock, the real opportunity in the Tapajos is that the hard rock sources for the vast majority of these placer gold fields has not been identified so far. So we've been working there for some time.

2:05I've been involved in several discoveries in the Tapajos region, notably the Tockenton-Zinio gold deposit, which is quite close to our project. In fact, it's just 20 kilometres to the southeast of us. So G-mining has made a big success of developing that. that gold project. It's now Brazil's third largest open pick gold mine. There are some other players in the region, such as Sarabi Gold. We've been there quite some time, and we're on the same fault zone, and we have the ground immediately to the northwest of G-Mining. So it's a very exciting area. It's a very exciting region. As I said, most of these placer gold fields, the hard rock sources have not been identified.

2:50So it's an exciting place to work.

2:55Alan Carter: You announced first gold in September, first gold pour rather in September, your first sale at the end of the month. You haven't given production guidance during the ramp up, but you told another interview recently that you expected commercial production in November. Still sticking to November. What are the numbers that you want to hit to declare it? yeah a mid mid-november michael look um this phase one project was two we're developing the district in two phases phase one is a heat leach operation which is mining and processing the um the saprolytic material so this is the weathered material it's about 60 70 meters thick so we are ramping up to commercial production um commercial production for us is about 70 percent by design throughput and we um we want to uh achieve that 70 percent uh throughput by for a period of at least 30 days so yeah i i think early to mid-november we should hit commercial production according to that that those criteria so um uh uh yeah it's it's so far so good it's going very well uh we should remind it and then you've emphasized it within your deck this is a phased approach as well too so you're doing this gold production right now just because you're looking at kind of a larger a larger story down the road but at this point as well too these are operations that are going to that are going to further advance the company yeah there is a much larger phase two project coming along behind it we expect to complete a PA next year on on the phase two which is a hard rock which will be a big much bigger hard rock mine but for now the focus is on optimizing what we've just built for phase one which as i said is a heat leach operation which is mining and processing the saprolitic material so this is the weathered material we are hoping to expand that in the next nine months or so to double that throughput and we'll be putting out some guidance on our expansion plans with respect to phase one in the next few weeks.

5:00So we're quite busy.

5:01Alan Carter: Now, Alan, could you talk a bit more about comparisons? Because you did mention at the top G-Mining is Tocenton-Zeno. G-Mining is roughly valued about 10 times of Cabrel. They are produced 172 ,000 ounces. You do note in your deck that Kuyukuyu produced an estimated 10 times the placer gold of the Tocantin-Xino area. Can you talk about those comparisons, how far you can kind of take them and what the promise is that you can kind of see it Cabral? Yeah, Tocantin-Xino is the largest mine in the entire Tapajos, the largest hard rock mine, Michael. I was involved in the discovery of that. I used to own the Walty in Tocantin-Xino.

5:46It's been a big success. You mentioned G-Mining has become quite a large company. They're now developing the second project in Guyana. Before we did any drilling at Tocantins India, we did a soil survey and we got a golden soil anomaly, which is about a kilometre across. And the open pit mine is basically developed on that golden soil anomaly. The equivalent golden soil anomaly at Kuyukuyu is seven kilometres across. So it's got a much bigger footprint. Historically, during the gold rush that I mentioned, the amount of gold that was recovered by the small miners at Tocantinsinia was about 200 ,000 ounces, according to the Ministry of Mines in Brazil.

6:26The amount of gold that came out of our area at Kuyukuyu, which is on the same fault structure just to the northwest, is 2 million ounces. So Kuyukuyu, for whatever reason, produced an order of magnitude more classical historically, and as a golden saw anomaly, which is seven times larger. Added to that, we are currently modelling six gold deposits. Tocantin-Zinia is a single deposit. We have at least six now at Kuyukuyu. There isn't one that's yet the same size as Tocantin-Zinia, but these are all sort of medium-sized gold deposits here. And we've got 50 peripheral targets here where we've got some very, very compelling drill results and results from boulders on surface and trench results.

7:09So Kuyukuyu is a big district. In fact, arguably, it's the largest placer field in the entire Tapajos region. So we think we're going to find a lot more. We've got a lot of work to do. We need to fund all this exploration work and phase one more than fund the exploration going forward.

7:28Alan Carter: What are you seeing in terms of recoveries right now? What are you seeing on the paths so far? I believe that the focus is on the MG zone, the MG deposit within the Kuyu-Kuyu, looking at 92 % to 93 % recoveries. But do you look at that in terms of as you kind of spread out and also, I guess, in terms of what you're seeing from G mining as well, too? Yeah, the pre-feasibility study on phase one that we put out in July last year discounted those actual results to about 87%. So we were expecting about an 87 % recovery in reality. We don't know exactly what the recovery is going to be here, Michael, until the first pad has run its course of its leech process.

8:13It hasn't run its full term yet, so it's still leeching. Obviously, you recover more gold at the start. We know from the test work that about 70 % of the gold dropped out from the column tests in about 12 days. So metallurgically, it appears to leach extremely well. That's been our experience in the first few weeks here. As I said, we might know what the actual recoveries are, but there is a lot of gold coming out of these pads. It's actually surprised us how much gold has come back, how quickly. So it's leaching extremely well, but it's, you know, it's very early days. we need to wait until this first pad has finished its course, and we won't know exactly what the recoveries are until we analyze the residual material and determine how much gold is still left in that residual material.

9:01Alan Carter: What are you looking in terms of cash flow, free cash flow that you're going to be generating next year out of this mine? And then also you do have the gold loan payments that you're going to be making in addition to that. Yeah, that's right. Look, we haven't given any guidance yet for 2027. We anticipate producing at least 25 ,000 ounces during the calendar year 27. As I said, we're ramping up. So as you know, we're producing gold right now. And the all-in-cash cost is probably going to be around about the number in the feasibility study, which was a 1200 us dollars an ounce so there's pretty good margin even at the current gold price which is as you know is backed off a little bit we're looking at about three thousand dollars us margin pre-tax on about 25 000 ounces that's sort of ballpark number about 75 million us dollars so um that um that may go up or it may go down slightly as i said we'll wait um until the ramp pups complete before we give guidance uh which is probably at least a couple of months away so so we'll see but as i said it's going extremely well now we do have plans to double that and so we will be announcing that we're um expanding that pretty aggressively in the next few weeks so quite a lot going on uh it that uh doubling is uh due to the phase two build out um in terms of like uh what you're currently at the phase one right now it's it could depend on recoveries it could depend on terms of how you're ramping up right now but uh phase two would be where you'd actually kind of see that doubling correct no phase two is completely different phase two is to mine the hard rock material so this is a doubling of the phase one output so this would be a doubling of the heat leach operation mining the saprolite thank you uh talk about what you're seeing right now in terms of uh budgeting uh phase one uh capex uh 37 million in US.

11:08Alan Carter: That was set in 2025. You said the project has been tracking on budget. Costs have been moving within the industry, if I don't need to tell you as well, too. How are you confident in terms of phase two being, you know, that expansion being funded from what's happening with what you're getting out of Kuyukuyo? Yeah, I think the phase one expansion, Michael, that we were just talking about should not cost us an awful lot more money. We're working on that now, but I think it'll be a fairly modest CapEx. We've done quite a lot of work during the initial build so that we've done a lot of preparatory work so that we're ready for this expansion and the doubling of the throughput.

11:55So I don't know the exact number, but I would anticipate that it would be less than 10 million US to double the throughput on phase one. So, you know, that would, if the grade stays the same, and the grade may come down a little bit, but if the grade stays the same, that would mean in calendar 2028 that we'd be doing sort of, you know, between 40 and 50 ,000 ounces a year at a similar sort of cost. There's obviously been some inflation in terms of costs, particularly diesel prices, which have gone up, but our grade is also somewhat higher than expected. So that's counteracting the inflationary cost pressures.

12:39Alan Carter: Talk about what you're seeing with your drill campaign. You have six drill rigs that are operating right now. You've had some high-grade drilling coming on. How are you looking right now in terms of fitting that in within your broader plans for expansion? Yeah, look, we are very committed to exploring this entire district. As I said, there's 50 peripheral targets here where we found gold. These are peripheral targets to the six known gold deposits here. Some of these targets have some extraordinary numbers associated with them. I'll give you some examples. I mean, we've got drill holes here that we haven't followed up that include 27 meters at 6.9, 3.4 meters at 34 grams.

13:29We've got boulder fields here, which are 300 meters across with big blocks of quartz sulfide material lying on surface, which are averaging over 90 grams a ton in one case, sort of 75 grams a ton in another case. We've got trenches here that are five and a half meters at 24 grams that we haven't followed up. We've got veins sticking out the ground. And all these are different targets, by the way. Vains sticking out the ground, which are running 3.7 kilograms a ton. Gold, not silver. Now, the problem we've had is that we've never had the capital as an explorer to go and test all these things. It sounds crazy, but we've been focused on expanding and working on the known gold deposits that we've got.

14:16And we just haven't had the money to go and test all these things. This phase one operation will give us more than enough cash to really continue to aggressively drill these things. And we have been getting some very good numbers in the last year or 18 months or so. Earlier this year, we drilled 9.5 meters at 87.4 grams gold. That was at Jeremun Seema. So that's the most recent of the new gold deposits that we've discovered since the last resource update in 2022. And that's not an isolated hit. Mashishi Northeast, that's another relatively recent discovery. We've had 11 meters at 33 grams there, 12 meters at 27.7 grams.

14:58You know, there are some very, very compelling targets here at Kuyuki. It is a true district play. So this phase one operation, again, will allow us to continue to drill pretty aggressively on this.

15:15Alan Carter: Lastly, Alan, Brazil's runoff is October 25th. The operating license comes from the Paris state government. Your full mining license is still pending. Changes at Brasilia? Any changes at Cabral? No. Look, I think whoever wins the election, it will be very positive for us. you know, we'll wait and see. It is obviously a very close race. Nothing's decided until the 25th, but, you know, we're looking forward to it. Both candidates are very supportive of the resource industry in Brazil. The resource industry in Pará in particular is enormous. Pará hosts the world's largest iron ore deposit, which is Carajás iron ore deposit on the eastern side of the state.

16:00It has some very big copper mines and also some enormous bauxite operations and now it's starting to develop a significant gold mining industry too. So we're very happy to be part of that and we're looking forward to seeing what the next few months bring. I think between now and the end of the year, as I said, we're hoping to hit commercial production from phase one. We will be giving some information out on the ramp up of phase one or the expansion of phase one. The other big catalyst that we haven't mentioned, of course, is the update to the resource estimate. So we are currently modelling six gold deposits at Kuyu-Kuyu.

16:42The last time there was an update on the gold deposits in the district, we had three gold deposits back in 2022, in September 2022. So we're hoping that there'll be some significant growth in the next resource estimate. I think it's going to keep growing. In fact, I'm certain it's going to keep growing. We will be putting out a resource statement every year, and I anticipate every year there'll be resource growth. So it's a pretty unusual district, Michael, for various reasons. So that should be an exciting few months moving forward. Alan Carter.

17:20Alan Carter: Thanks for speaking with Mining Stock Daily. Thanks very much, Michael. The information presented should not be considered investment advice. Mining Stock Daily Yance affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.