Research Note – Cerrado Gold – Further QoQ Growth at MDN in Q3; Increasing TP on Execution
Cerrado Gold Inc. ( $CERT.V , $CRDOF ) reported another solid quarter of production growth at its MDN operations in Q3/26 producing 16.7Koz AuEq, which beat our forecast by +8% driven by increased CIL production. Management reiterated expectations for 2026 production at the upper end of guidance, and exploration continues to advance ahead of the Q1/27 PEA to support an extended mine life and potentially increased production levels. We expect successful execution on incremental production growth will continue to translate to strong cash flows in the meantime. We are maintaining our BUY rating and increasing our target price to C$4.00/share (previously C$3.50/share) on Cerrado Gold.
16.7Koz AuEq in Q3 beat our 15.5Koz estimateand increased +8% QoQ from 15.4Koz in Q2 (+21% YoY). This follows a +20% QoQ increase in Q2 as CERT continues to execute on expanding production at MDN. In Q3, 9.6Koz AuEq from heap leach remained steady QoQ, with incremental growth driven by 7.0Koz AuEq from CIL production vs. 5.4Koz in Q2 (+29%), and our estimate of 4.1Koz. This was driven by selectively routing high-grade Calandrias feed (>2.5 g/t Au) to the mill as opposed to the heap leach where CERT can realize higher recoveries.
2026 production is expected to be at upper end of guidance. In August, management indicated a strong likelihood 2026 would come in at the high end of 50-60Koz guidance (read our note here), and this was reiterated this morning. 9-month production of 44.9Koz AuEq is tracking at 82% to the midpoint (75% to the upper bound), putting the Company well on track heading into Q4. CERT continues to anticipate higher H2 production vs. H1 facilitated by additional underground ore. We are forecasting 2026 production of 62Koz AuEq (16.8Koz AuEq in Q4).
Exploration continues to progress ahead of the late Q1/27 PEA,and drilling at the Falcon Property is now a key focus to support further resource growth. Recall, CERT previously provided an internal near-term target for Falcon of 150-200Koz (0.8-1.1 g/t), which we anticipate will be achieved. The PEA is expected to outline additional resources for both the heap leach and CIL plant, facilitating an extended mine life, and the potential to increase production rates.
Q3 Financial Estimates
CERT intends to report its Q3 financial results prior to November 23rd. After updating for production results, our Q3 estimates are as follows:
• Revenue of $68.9M modestly up from 64.6M in Q2.
• Adjusted EBITDA of $29.4M vs. $28.2M in Q2.
• AISC declining QoQ from $1,933/oz to $1,880/oz on higher production.
• OCF of $18.1M compared to $11.6M in Q2
