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Cerrado Gold Buys Pan American's Idled Manantial Espejo Mine for US$20 Million, Targets 2027 Restart

The Argentina-focused producer picks up a 2,500-tonne-per-day mill and a mine with roughly 1.4 million gold-equivalent ounces of history, paid for in cash with no new shares.

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Cerrado Gold Buys Pan American's Idled Manantial Espejo Mine for US$20 Million, Targets 2027 Restart

Most junior producers grow by building.

Cerrado Gold Inc. (TSXV: CERT; OTCQX: CRDOF; FSE: BAI0) just bought a mine with the mill already standing. Before the open on Friday, November 13, the company said it has acquired 100% of Minera Tritón Argentina S.A., owner of the past-producing Manantial Espejo gold-silver mine in Argentina's Santa Cruz province, from Pan American Silver Corp. (TSX: PAAS; NYSE: PAAS) for US$20 million in cash.

The terms are light on upfront cash. Cerrado paid US$10 million at closing, with two further US$5 million payments due on the first and second anniversaries. No Cerrado shares are being issued and no shareholder approval is needed. The purchase is funded by Cerrado's Argentine subsidiary, Minera Don Nicolás, using Argentine funds. Pan American also receives a 1.0% net smelter returns royalty in settlement of intercompany debt owed by Minera Tritón, secured by a first-degree mortgage over the concessions and a Cerrado parent guarantee. A pre-existing 0.5% NSR applies to certain concessions. Cerrado takes the company "as is, where is," assuming all historical, current and future liabilities, including closure obligations backed by a Santa Cruz financial closure guarantee of about US$13.8 million.

What Cerrado gets is a serious piece of Patagonian plumbing. Manantial Espejo was built in 2006 and began operating in 2008. Using Pan American's public data, Cerrado calculates the mine produced about 1.4 million gold-equivalent ounces (GEOs) through 2022, peaking near 137,500 GEOs in 2011 and still turning out 68,000 GEOs in its final full year, before mining ended in late 2022. It has sat on care and maintenance since early 2023. The package includes a mill rated at up to 2,500 tonnes per day, a tailings facility, doré production capability, two historical open pits and underground workings reached from three portals, plus 25 mining properties covering about 45,255 hectares and three surface ranches. Cerrado says its due diligence found the facilities in good condition.

The scale explains the appetite. Cerrado's existing Minera Don Nicolás operation produced 16,685 GEOs in the third quarter of 2026, up 21% year over year, bringing year-to-date output to 44,942 GEOs against guidance of 50,000 to 60,000 ounces, according to The Deep Dive. Manantial Espejo, at its peak, produced more than twice that guidance. In an interview with The Deep Dive two weeks before closing, chief executive and chairman Mark Brennan said Cerrado wants to "go to a new plateau, a new level," and suggested Argentine output could exceed 100,000 ounces a year. In Friday's release he said the deal positions Cerrado for "significant accelerated production growth in Santa Cruz."

The restart is planned in phases, starting in 2027. Phase one is de-watering the underground mine and refurbishing infrastructure, expected to take up to six months, followed by bringing a new mining fleet to site. Cerrado intends to commission from low-grade stockpiles blended with fresh underground material, with an initial mill rate of about 1,000 tonnes per day, well below nameplate. A roughly 40,000-metre drill program in 2027 is meant to support a first resource estimate, targeting the Punta Maria vein, open-pit pushbacks and near-mine surface anomalies within about 10 kilometres. No production guidance has been given yet.

Investors warmed to the idea as the morning went on. Cerrado shares closed Thursday at C$2.12 and were trading at C$2.25 by 12:20 p.m. ET Friday, up 6.1%, on about 676,000 shares across all Canadian venues, roughly C$1.47 million traded, after touching an intraday high of C$2.29. That is a healthy vote of confidence for a no-dilution deal, if not yet a stampede, which suggests the market wants to see permits and a resource before fully pricing in a second mine.

The local stakes are real. Cerrado says the Santa Cruz government expedited the transaction and that the restart should create direct local jobs. When Pan American laid out closure steps in 2024, Gobernador Gregores mayor Carina Bosso said the impact on the town was "something tremendous," according to iProfesional (translated from Spanish). Spanish news agency EFE reported Brennan's stated goal is for the mine to recover its historical production levels. JuniorStocks found no independent analyst commentary on the deal at the time of writing.

Now the caveats, and there are several. Manantial Espejo has no current NI 43-101 mineral resource or reserve, and no preliminary economic assessment, pre-feasibility or feasibility study. The exploration target of 1.3 million to 1.8 million tonnes grading 1.5 to 2.8 g/t gold, described as left unmined at closure, is conceptual and not a resource, and historical drill results were assayed at Pan American's internal lab without independent verification. Permits, including the environmental impact report, must be updated or renewed before mining resumes. Cerrado inherits every legacy liability, still owes US$10 million in deferred payments, and the release is inconsistent on whether the roughly US$13.8 million closure guarantee will be covered by a letter of credit or an environmental insurance policy. Technical information was approved by Andrew Croal, P.Eng., Chief Technical Officer, and Cid Bonfim, P.Geo., Senior Geologist, both Cerrado employees and not independent.

Still, US$20 million for a mill, existing underground workings and 45,000 hectares of Deseado Massif ground is the kind of math that gets attention. If Cerrado can drain the workings, renew the permits and drill out a resource on schedule, Manantial Espejo may prove that in mining, the best new mine is sometimes an old one.

Sources

Disclaimer

Neither the author of this article nor JuniorStocks holds equity, stock options, or any other financial positions in Cerrado Gold Inc. (TSXV: CERT; OTCQX: CRDOF; FSE: BAI0) or any other companies mentioned in this publication. This content is published by JuniorStocks strictly for informational purposes, was prepared independently without company compensation, and utilized AI assistance for text editing, formatting, and generating accompanying media. While the planned restart of a past-producing Patagonian gold mine with its mill already in place represents a compelling development story, this article does not constitute investment or financial advice. Investors are strongly advised to conduct their own thorough, independent due diligence and consult with a qualified financial professional before making any investment decisions.

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