TIDMMAFL
Mineral & Financial Invest. Limited
26 March 2020
Mineral & Financial Investments Limited
Investment Update: Cerrado Gold - Completes Acquisition
to become a Gold Producer
GEORGE TOWN CAYMAN ISLANDS, March 26, 2020 - Mineral and
Financial Investments Limited (LSE-AIM: MAFL) ("M&FI" or the
"Company") is very pleased to announce that Cerrado Gold Inc, one
M&FI's investee companies has completed an acquisition.
MAFL owns 625,000 shares or about 1.5% of the Cerrado Gold Inc
("Cerrado").
Cerrado has entered into an agreement with Compania Invesora En
Minas S.A. and Compania Invesora Argentina Para La Exportacion SA
("Sellers") to acquire Minera Don Nicolas S.A. ("MDN") and its
namesake operating mine and surrounding properties in Santa Cruz
Province, Argentina. Under the terms of the agreement Cerrado paid
the Sellers an initial payment of US$15 million at closing, with
future payments of $10 million in 24 months, $10 million in 48
months and US$10 million in 60 months from closing. The Sellers are
also entitled to a performance bonus based upon an increase in
reserves in the future. Highlights of the acquisition by Cerrado
are set out below:
-- Adds a producing asset, producing free cash flow to a
M&FI investee company - Don Nicolas could produce up to 50,000
ounces per year, for at least 7 years, with upside from exploration
to extend the mine life. The current All in Sustaining Cost (AISC)
is less than $1,000/oz of gold.
-- Excellent infrastructure - Newly built processing plant in
operation for two years, well- established camp with its own power
facilities
-- Cerrado's management experience to enhance operations - New
operational procedures are expected to deliver significant
operational improvement, higher production and lower unit costs.
These significant potential for operational improvements are
expected to deliver increased production and free cash flow.
-- Enhances Cerrado's existing mineral Resources & Reserves
- Transaction adds to Cerrado's Mineral Resources & Reserve
base in Brazil. Property encompasses over 272,000 hectares and is
located within the highly prolific Deseado Massif region, Santa
Cruz Province, home to several multi-million-ounce deposits.
Exploration to extend mine life is viewed as highly prospective,
with a number of brownfield prospects already identified and
drilled.
-- Non-dilutive financing of acquisition to complement Cerrado's
existing project - Cash flows leveraged from Don Nicolas can
advance Brazilian Monte do Carmo exploration.
-- Favorable acquisition timing - Gold price has appreciated
over 20% in the past year, significantly improving the confidence
in base case expectations.
-- First step in Cerrado's goal of becoming an intermediate producer.
MINERA DON NICOLAS OVERVIEW:
Minera Don Nicolas is located 1,625km south west of Buenos
Aires, Argentina in the Deseado Massif region in the mining
friendly province of Santa Cruz. The project consists of numerous
exploration concessions totaling 272,598 hectares. The largest
regional centre is Comodoro Rivadavia, 220km away by paved highway,
which provides logistical and other support for the operations.
MDN is situated within Deseado Massif where the underlying
geology of the region is dominated by rhyolitic and andesitic
volcanic and tuffaceous volcaniclastic lithologies of Middle to
Upper Jurassic age (130 to 170 ma). It is crisscrossed by numerous
extensive fault and fracture zones which served as conduits for
hydrothermal activity during periods of Jurassic volcanism. The
result of this activity is a widespread network of shallow level
mineralized, epithermal fissure veins, breccias, and stock-work
systems, many of which carry potentially economic gold and silver
mineralization. The Deseado Massif region is host to several
multi-million-ounce epithermal gold and silver deposits including
Cerro Vanguardia (Anglo Gold Ashanti), Cerro Negro (Newmont
Goldcorp), Cerro Morro (Yamana).
In February 2012, a Full Feasibility Technical Report was
published in accordance with National Instrument 43-101 ("NI
43-101"). That Technical report is available of the Company's
website: https://www.cerradogold.com/
Construction of the operational facilities was completed in 2017
and has been ramping up to full capacity during 2018 and 2019.
Current mining operations are conducted in two areas; the high
grade La Paloma deposit and the Martinetas deposits, which are
approximately 30km apart. Ore is processed through a 1,000 TPD CIL
plant located near the Martinetas pit. The project currently
supports 325 employees and contractors on a fly-in fly-out basis.
Don Nicolas has strong regional backing having signed agreements
with the two neighbouring communities and has received strong
support from the government of Santa Cruz.
Cerrado undertook a fundamental review of the MDN resource
database and based upon reinterpretation, Cerrado's internal
estimates suggest that the operation currently hosts approximately
2.97 million tonnes at 4.62g/t which includes initial mine plan
gold resources of 2.0 million tonnes at an average grade of 5.19
g/t. However, there can be no guarantee that this gold can be
extracted and this information is provided for guidance only, and
should not be relied upon.
Cerrado sees numerous target areas that can be expected to be
quickly added to the resource inventory with only modest
exploration efforts. We note current resources are restricted to
open pit mining methods as previous operators focused on open pit
targets only. That said, many known ore zones continue and remain
open at depth, similar to the other mines in the region offering
significant exploration potential for underground operations in the
future.
Upon taking ownership Cerrado plans to introduce new operational
strategies at MDN, which are expected to add significant
improvement with limited additional capital, in the overall
operation within a relatively short period of time. The Company's
initial focus will be on enhanced grade control activities to
increase the head grade delivered to the mill, sustaining the mill
throughput rate at its design capacity of 1,000 tpd and recommence
exploration efforts that have been on hold for the better part of
three years.
Cerrado believes the exploration potential of the property
remains highly prospective to increase the mine life from both
additional open pit and underground potential. In addition, Cerrado
will also investigate the potential to increase production via the
processing of the significant amounts of low- grade stockpiles via
heap leaching in the future as is seen at nearby operations.
On the Corporate front, Cerrado continues to seek a path forward
to become a public company, maintaining its commitment to provide
liquidity to its current shareholders. Cerrado also expects to
deliver a strong operational turnaround at MDN while also looking
to increase resources at its Monte Do Carmo operations.
FOR MORE INFORMATION:
James Lesser, Mineral & Financial Investments Ltd. +44 777 957 7216
Katy Mitchell, WH Ireland Group Limited +44 161 832 2174
Jon Belliss, Novum Securities Limited +44 207 399 9400
ABOUT MINERAL AND FINANCIAL INVESTMENTS LIMITED:
Mineral and Financial Investments Limited is a Swiss and Cayman
Island based investment company quoted on AIM, a market of the
London Stock Exchange. M&FI has 22 investments in the natural
resource sector with the majority in the metals and minerals sector
and has about 29% of its investment portfolio in precious metal
investments. M&FI's Net Asset Value per share (NAVPS)is 15.19p,
as of December 31, 2019. M&FI's NAVPS has risen at a Compound
Annual Growth Rate (CAGR) of 23.8% over the past 5 years.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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