Cabral Gold Is Insanely Undervalued

Note: this is an excerpt from the October 31st issue of my Mining Stock Journal.

Cabral Gold (CBGZF, CBR.V - US$0.22) - Cabral released the prefeasibility study on the gold-in-oxide starter project at Cuiu Cuiu. The base case after-tax NPV using $2,250 gold is US$25.2 million and provides an IRR of 47.3%. At $2710 gold - the current price at the time the PFS was released - the NPV is $49.3 million and the IRR is 82.6%. The PFS shows a 4.5-year mine life. Initial production will be just under 20,000 ozs/year at an AISC of US$1,003. The upfront capex is $37.4mm. The Company believes this number will be reduced as it completes the detailed engineering and looks at options like used equipment. The current expectation is for a construction decision in Q2 2025 with first production in mid-2026.

Also keep in mind that this is a "snap-shot" of the starter mine economics that incorporates the measured/indicated resource from the MG and Central gold deposits along with an inaugural resource at Machichie. A PFS can only consider the processing of meas-ured/indicated (or reserves/proven/probable). The current gold-in-oxide resource is 171,833 indicated ozs and the PFS only incorporates mining 83,700 ozs of this total. The rest of this ore is either low-grade or situated in blocks of inferred resource. This indicated resource has a great chance of being upgraded to indicated.

In addition, the resource includes 151,608 ozs of inferred resource. A large portion is at Machichie. A major focus of the Company over the next six months will be drilling to upgrade as much of this inferred material to indicated and incorporating it into the mine plan. This will further enhance the economics of the PFS.

The cash flow generated from this operation will be used to fund the aggressive drilling of the much larger resource hosted by Cuiu Cuiu in the hard rock mineralization that is beneath the gold-in-oxide resource. The cash flow should thus enable the development of the larger project without having to issue more shares once the mine operation is started-up.

Note: the rest of this post, which contains my valuation of Cabral’s start-up mine operations is for paid subscribers. The paid subscription includes a subscription to my Mining Stock Journal.