Cerrado Gold (TSXV: CERT) has picked up Pan American Silver’s idled Manantial Espejo mine in Argentina’s Santa Cruz province for US$20 million in cash, adding a second processing plant to its provincial footprint without issuing a single share.
Cerrado’s subsidiary Minera Don Nicolás paid US$10 million at closing for Minera Triton Argentina, owner of the mine, with two further US$5 million payments due on the first and second anniversaries of the deal. Pan American also receives a 1.0% net smelter returns royalty on future production in settlement of intercompany debt, while Cerrado assumes all existing liabilities, including a closure guarantee of roughly US$13.8 million.
Manantial Espejo produced an estimated 1.4 million gold equivalent ounces between 2008 and the end of 2022, peaking near 137,500 ounces in 2011 before lower grades and dwindling open-pit feed pulled output down. It has been on care and maintenance since early 2023.
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The infrastructure is a large part of the appeal. The site includes a mill with capacity of up to 2,500 tonnes per day, a tailings facility, doré production capability and underground workings accessed through three portals, all of which Cerrado’s due diligence found to be in good condition.
Cerrado intends to restart the operation in 2027 under a phased plan, beginning with up to six months of underground dewatering and plant refurbishment. The mill would initially run at about 1,000 tonnes per day on low grade stockpiles blended with newly mined underground ore, leaving spare capacity should more feed be found.
Permit updates are still required before mining resumes.
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In an interview with The Deep Dive two weeks before the deal closed, CEO and Chairman Mark Brennan said Cerrado produces 50,000 to 60,000 ounces of gold a year in Argentina, while suggesting they have an eye towards expansion.
“We’re now at a point where we’re looking to expand from that and go to a new plateau, a new level,” he said, adding that output in the country could top 100,000 ounces a year in the foreseeable future.
The property carries no current resource estimate. A roughly 40,000 metre drill program planned for 2027 aims to deliver one, with the Punta Maria vein as the priority target after eight Pan American holes outlined high grade mineralization along 600 metres of strike.
Cerrado Gold last traded at $2.12 on the TSX Venture.
