Cerrado Gold Introduces Gold Production Growth Strategy and Provides Update from Its 2021 Exploration Program at Its Minera Don Nicolás Gold Project in Argentina

• Dual Stream Production Strategy to add lower grade stream to existing high-grade stream and expected to deliver production of approximately 70,000 ounces of gold (“oz Au”) per annum by Q1 2023 and increase gold production capacity up to 90,000 oz Au by late 2023

• High grade material (cut-off grade of +1.6 grams per tonne gold; “g/t Au”) to be processed through current CIL plant anticipated to deliver 40,000-50,000 oz Au per annum

• Lower grade material (cut-off grade of +0.3 g/t Au) to be processed via planned heap leach operations at both Calandrias and Martinetas expected to add approximately 40,000 oz Au of annual production capacity

• Underground Potential Paloma Area:
  • Deep drilling to commence at the southern edge of the Sulfuro Vein where a high-grade subvertical shoot has been delineated by historical drilling approximately 125 metres (“m”) below the current pit. Drilling in 2022 to target an additional 200m of down plunge extension.

• 2021 drilling has outlined numerous lower and high-grade resource targets to support the growth strategy

  • Significant tonnage of lower grade material that was previously treated as waste identified to be heap leached (cut-off 0.3 g/t Au)

Toronto, Ontario–(Newsfile Corp. – February 9, 2022) – CERRADO GOLD (TSXV: CERT) (OTCQX: CRDOF) (“Cerrado” or the “Company”) is pleased to provide an update to its development strategy for gold production growth and to provide the remaining results of its 2021 near mine exploration drill program (12,578 m) at its Minera Don Nicolás (“MDN”) Project located in Santa Cruz province, Argentina.

Following recent drilling and a thorough review of the current resources and mine plan at MDN, Cerrado has commenced development plans that should substantially add to the production profile at its MDN operations through a Dual Stream Production Strategy to more fully exploit the entire resource potential. The Dual Stream Production Strategy will focus on processing high-grade material (cut-off 1.6 g/t Au) through the existing CIL plant and the development of heap leach facilities for processing of lower grade material (cut-off 0.3 g/t Au) that is currently treated as waste or stockpiled for future use.

Dual Stream Production Strategy

Previously, lower-grade material at Martinetas (e.g., Cerro Oro and Coyote) was either ignored, treated as waste or sent to a stockpile. Metallurgical test work to date (see press release dated September 1, 2021 for more details) suggests gold recoveries via heap leach operations can economically treat much of this material.

As the results of the recent drill program demonstrate, many high-grade areas have a significant halo and/or internal dilution zone of lower grade material that can now be viewed as ore moving forward. The high-grade stream will process ore through the existing CIL plant with an estimated annual production of 40,000 – 50,000 ounces of gold per annum.

In addition, the Company plans to develop two heap leach operations. The first, as outlined in the press release dated September 1, 2021, will focus on the Las Calandrias and Escondido deposits at the northern perimeter of the property. Production is expected to average approximately 25,000 ounces of gold commencing in Q1 2023 with an initial mine life, prior to additional exploration, of approximately four years. A second heap leach operation is to be developed in the Martinetas mining region to process lower grade material that is either currently being treated as waste or stored in a lower-grade stockpile. Cerrado believes this could be in operation by late 2023 adding a further potential of 15,000 – 20,000 ounces of gold per annum.

Deep Drilling/ Underground Exploration

As part of the plan to process only high-grade material through the CIL plant (cut-off 1.6 g/t Au), Cerrado’s drill plan for 2022 will include a strong focus on deeper targeting beyond the extent of current LOM pits. The first area of focus of the deep drilling will be the southern edge of the Sulfuro Vein (Paloma) where a high grade subvertical shoot has already been delineated with historic drilling approximately 125 m below the LOM pit. Drilling will target an additional 200m of down plunge extension.

The move towards underground mining is in keeping with the transitions undertaken at both MDN’s neighbouring mines – Yamana’s Cerro Morro operation and Anglo American’s Cerro Vanguardia mine. Based upon current resources in place, Cerrado’s exploration team believes it can readily outline potential resources in excess of 100,000 ounces of gold in underground mineralized material to act as an initial source of feed to the mill.

Current resources and future exploration plans are now being considered with this new production strategy in mind to best utilize the current and future resources at MDN. Future resource activity and updates will focus on outlining resources available to both production streams.

Mark Brennan, CEO & Co-Chairman, commented, “We are very excited to introduce this new development strategy that will maximize both resource and production growth at MDN. It has been a challenging yet very interesting period since Cerrado acquired the MDN Mine; the first phase was focused upon ramping up production and cash flows during a very intense COVID operating environment; which the team has very successfully achieved, and now as the next phase, we have a road map to develop what we believe will be the true potential for the MDN mine moving forward.”

He continued, “Exploration work to date has identified near mine, high-grade potential targets and has opened up additional lower-grade targets which can be quickly brought into the mine plan. The Dual Stream Production Strategy is expected to provide Cerrado with a platform for continued production growth, operational flexibility and extended mine life at MDN.”

2021 Exploration Drill Results

Diamond drill holes (“DDH”) from MDN’s exploration program were collared at the Baritina and Araña targets in the Paloma area (14 DDH, totalling 943 m); and at the M11 Mara, Gecko and Choique targets in the Martinetas area (47 DDH, totalling 4,709 m), see Figure 1. The focus of the 2021 near mine program has been to delineate new, high grade, mineralized zones and increase the confidence of near surface mineralization that have the potential to quickly be converted into mineable material. All targets are in the proximity of Cerrado’s current mining operations, La Paloma and Martinetas pits.

Drill Hole Highlights by target area (all composites are reported as true thickness):

Baritina

PA-D21-85

• 8.00 m at 1.67 g/t Au, from 46.30 m
  • Including 3.60 m at 2.16 g/t Au from 48.00 m

PA-D21-86

• 14.62 m at 1.45 g/t Au, from 33.25 m
  • Including 1m at 3.48 g/t Au from 54.60 m

PA-D21-88

• 3.28 m at 2.69 g/t Au, from 46.95 m

Mara/Armadillo

MA-D21-043

• 4.79 m at 1.21 g/t Au, from 58.40 m

Choique

CH-D21-049

• 1.90 m (apparent width) at 7.05 g/t Au, from 44.55 m
  • Including 1.00 m (apparent width) at 13.29 g/t Au from 44.55 m

CH-D21-054

• 4.60 m at 1.43 g/t Au, from 19.60 m

Gecko

GK-D21-011

• 1.43 m at 2.85 g/t Au, from 52.50 m

Near Mine Drill Program at MDN

The 2021 exploration drill program at the Minera Don Nicolás Project totalled 12,578 m, commenced in February 2021, and was completed in September 2021. Assays were fully received in November 2021 and all the previously outstanding results are disclosed in this press release, (Table 1. and Figures 1. through 3.).

Figure 2. Plan View Paloma Area Reported Drill Results

To view an enhanced version of Figure 2, please visit:
https://orders.newsfilecorp.com/files/6185/113205_5d059b8954eb6b5a_003full.jpg

The diamond drill rig was subsequently mobilized to the Martinetas area where an additional 4,709 m of drilling was completed in September. The Martinetas area encompasses more than five square kilometres (“km^2“) of argillic altered rocks that reveal a large fertile epithermal center. Mineralization includes sheeted veins (e.g., Cerro Oro) and discrete veins (Armadillo) which occur in several sectors within the large argillic footprint. Cerrado’s strategy at Martinetas has been to systematically explore targets identified within the argillic envelope focussing on permissive structural trends and possible continuities from the known and mined centers (e.g., Choique Southeast).

Drilling priorities considered the proximity of the different targets in relation to the current operations. Lateral step outs of known mineralized centers including Cerro Oro, Choique, Armadillo and Mara were identified as areas that contain shallow mineralization amenable to open pit mining and thus could be quickly converted into minable resources.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/113205