Cerrado Gold Signs Option and Loan Agreements With Subsidiary of Hochschild Mining PLC for the Sale of the Monte Do Carmo Gold Project for Total Consideration of US$60 Million (C$80 Million)

• Proposed Transaction with Amarillo Mineração do Brasil Ltda. to strengthen balance sheet and address lack of liquidity in the junior mining sector
• Company well-positioned to drive future growth via its operating Minera Don Nicolas gold mine in Argentina and its Mont Sorcier development project in Quebec

TORONTO, ON / ACCESSWIRE / March 5, 2024 / Cerrado Gold Inc. [TSX.V:CERT][OTCQX:CRDOF] ("Cerrado" or the "Company") announces that it has entered into an option agreement with Amarillo Mineração do Brasil Ltda. ("Amarillo") a wholly-owned subsidiary of Hochschild Mining PLC ("Hochschild"), whereby Cerrado has granted to Amarillo the option ("Option") to purchase a 100% interest in the Company's Monte Do Carmo project ("MDC Project") located in the State of Tocantins, Brazil (the "Proposed Transaction"), for total consideration of US$60 million (approximately C$80 million) (the "Purchase Price"), subject to the fulfilment of certain conditions.

The Purchase Price would be payable in the following stages:

1. US$15 million, initially advanced by way of a 10% interest-bearing secured loan (the "Signing Loan"), of which US$7 million has been advanced as of the date of the grant of the Option (March 4, 2024), US$1 million may be advanced within 60 days, and the balance of US$7 million may be advanced two days following the mailing by Cerrado to its shareholders of a notice of meeting and management information circular in connection with a meeting to approve the Proposed Transaction to be held by June 30, 2024 (the "Cerrado Shareholder Approval"). Upon the Cerrado Shareholder Approval being obtained, the Signing Loan, together with all accrued and unpaid interest thereon and expenses relating thereto, shall be deemed to be repaid in full by Cerrado by the concurrent set off of an amount equal to the Signing Loan due by Amarillo as part of the Purchase Price. If Cerrado fails to secure the Cerrado Shareholder Approval on or before June 30, 2024, the Signing Loan will mature on September 30, 2024.
2. An aggregate of US$45 million, payable in four installments over the next three years, approximately, as further described below.

During the Option Period (as defined below) Amarillo will take operational control of the MDC Project and has committed to spending a minimum of US$5m in qualifying expenditures.

Mark Brennan, CEO and Chairman commented: "The Proposed Transaction improves Cerrado's immediate short-term capital position and addresses short-term working capital needs while injecting development capital into the Minera Don Nicolas project. Going forward, Cerrado will be well capitalized with a strong gold production profile and leaves the Company positioned to pursue growth programs at our operating Minera Don Nicolas gold mine and our Mont Sorcier high grade iron project."

He added, "In just five years at MDC, the Cerrado team has defined a proven mineral reserve of approximately 1 million ounces of gold, has completed a robust Feasibility Study, is in the final stages of permitting approval, and has attracted strong capital partners for the majority of a potential project debt construction funding. Despite the achievement of these significant milestones, the Company has been unable to raise the funds necessary to reach the final investment decision for construction. The lack of liquidity and capital available to junior mining companies over the last six to nine months has been unprecedented. It is important to thank the dedicated team at the MDC Project for having done such a tremendous job bringing the MDC Project to its current state of readiness in such an expedited timeframe."

Transaction Summary and Details

Amarillo has agreed to advance the Signing Loan to Cerrado in cash as follows:

• US$7 million has been advanced by Amarillo (the "First Advance") on the date of the grant of the Option (March 4, 2024);
• US$1 million to be advanced 60 days after the date of the First Advance; and
• US$7 million to be advanced within two days following the mailing to Cerrado shareholders of the management information circular to be prepared in connection with the meeting of Cerrado shareholders at which management would seek the Cerrado Shareholder Approval on or before June 30, 2024.

Upon obtaining the Cerrado Shareholder Approval, the Signing Loan, together with all accrued and unpaid interest thereon and expenses relating thereto, shall be deemed to be repaid in full by Cerrado by the concurrent set off of an amount equal to the Signing Loan due by Amarillo as part of the Purchase Price. If Cerrado fails to secure the Cerrado Shareholder Approval on or before June 30, 2024, the Signing Loan will mature on September 30, 2024, at which time Cerrado will be obliged to: (i) repay the Signing Loan and other expenses (and any interest accrued thereon) no later than September 30, 2024; (ii) reimburse Amarillo for any costs incurred on the MDC Project between the date of signing of the Option Agreement (as defined below) and the date of termination of the Option Agreement; and (iii) pay to Amarillo a break fee in the amount of US$2.5 million.

Amarillo may exercise the Option at its sole discretion at any time during the Option Period by providing an exercise notice to Cerrado, following which an aggregate amount of US$30 million would be payable to Cerrado prior to the closing of the Proposed Transaction in cash as follows:

• US$10 million (the "Second Payment") in cash, payable within 5 days of the date on which Amarillo gives written notice of its exercise of the Option to Cerrado, which option expires on March 19, 2025.
• US$20 million (the "Third Payment", and, together with the Signing Loan and the Second Payment, the "Consideration") in cash payable upon either: (i) if necessary, the approval of the Proposed Transaction by Hochschild shareholders, which is to occur no later than June 30, 2025; or (ii) if Hochschild shareholder approval is not required, by no later than March 30, 2025.

In addition, Amarillo will make the following additional payments following the closing of the Proposed Transaction:

• US$10 million in cash payable within 14 days of the second anniversary of the date of the Cerrado Shareholder Approval (the "Second Anniversary Payment"); and
• US$5 million in cash payable within 14 days of the earlier of: (i) the commencement of commercial production from the MDC Project; and (ii) March 31, 2027 (the "Production Payment").

The option agreement ("Option Agreement") was entered into among Cerrado, Serra Alta Mineração Ltda., the Company's subsidiary in Brazil which holds the MDC Project, Amarillo, and Hochschild, in its capacity as guarantor of Amarillo's obligations under the Option and Loan Agreements. A loan agreement (the "Loan Agreement") was entered into by Cerrado and Amarillo, pursuant to which Amarillo has made certain credit facilities in the aggregate principal amount of US$15 million available to Cerrado in connection with the Signing Loan.

The closing of the Proposed Transaction is subject to a number of conditions, including: (i) the exercise of the Option by Amarillo; (ii) the payment by Amarillo of the full Consideration; (iii) the approval of the TSX Venture Exchange; (iv) the approval of the shareholders of Cerrado; and (v) satisfaction of other closing conditions customary in a transaction of this nature.

All amounts owing by Cerrado to, or advanced to Cerrado by, the Company or Amarillo, are secured by (i) a first lien on all of the outstanding equity interests (quotas) in Serra Alto, and (ii) a second lien on the assets relating to the MDC Project (the "Security"), until termination of the Option Period (defined below). The security is subject to a security sharing agreement with another secured creditor.

The Option will expire upon the earlier of (the period starting on the date of the Option Agreement and ending upon such expiry being the "Option Period") (i) March 19, 2025, (ii) the exercise of the Option and completion of the Proposed Transaction, and (iii) the termination of the Option Agreement. The Option may be exercised at Amarillo's sole discretion at any time during the Option Period, provided that all required payments have been paid by Amarillo. Pursuant to the terms of the Option Agreement, Amarillo is intended to assume operational control of the MDC Project from the date of the Option Agreement until the expiry of the Option Period, and Amarillo has agreed to incur exploration and other qualified expenditures on the MDC Project totaling no less than US$5 million during the Option Period.

The Proposed Transaction has been unanimously approved by the Board of Directors of Cerrado. The Company's Board of Directors, senior officers and principal shareholder, collectively owning approximately 23.6% of the outstanding common shares of the Company have entered into voting and support agreements to support the Proposed Transaction.

Background to the Proposed Transaction
The Proposed Transaction is the culmination of a prolonged capital-raising process initiated by management in the summer of 2023 in order to explore all possible funding alternatives to address the working-capital needs of the Company and fund the development of the MDC Project. During the second half of 2023, Cerrado undertook several formal attempts to raise equity capital with independent investment banks, and has pursued debt, alternative debt, private equity and strategic partnership alternatives to provide capital for the development of the MDC Project.

Despite the Company filing an extremely robust Feasibility Study positioning the MDC Project as potentially one of the world's lowest-cost producers of gold, with a strong after-tax NPV and IRR, low initial capital requirement, and the sponsorship of strong project debt finance partners, the Company has been unable to attract sufficient capital to meet both the obligations or continue development of the MDC Project, as well as funding the change in working capital position in its Argentinian operations (described below) due to the lack of global liquidity for junior mining companies and development stage projects.

With regards to the Company's Argentina operations, fiscal policy changes implemented in the country following the November 2023 general election, have imposed a significant financial burden to the Minera Don Nicolás ("MDN") operation, adding further strain to Cerrado's working capital position. The material devaluation in the Argentinian peso in December 2023 resulted in hyper-inflation that, in turn, has led suppliers at MDN to increase costs and significantly restrict typical creditors operating terms. These changes occurred during the final stages of a substantial capital investment program at the Company's MDN mine in Santa Cruz province, Argentina. Combined, these events have had a severe impact on Cerrado's overall financial sustainability and led to the decision to enter into the Option Agreement with Amarillo.

The immediate cash consideration received by Cerrado pursuant to the Proposed Transaction combined with anticipated production growth at MDN should address the short-term working capital requirements at MDN, and significantly enhance Cerrado's financial position and ability to progress operations moving forward. The MDN project has now completed a major capital investment program and the Company expects the operation to generate a period of strong cashflows supporting a reduction in debt levels at MDN over the next year.

In addition, recent announcements by the Argentinian government that currency controls may be removed during the second half of 2024, would be a strong catalyst for the fiscal environment for MDN to improve. Management expects that operating cashflow from MDN combined with the immediate proceeds from the Proposed Transaction, and, ultimately the possible exercise of the Option, will put Cerrado in a robust financial position with a strong balance sheet from which it can organically grow and increase shareholder value at the Company's operations.

Subsequent to the recent capital investment program at MDN, the mine is now positioned to start to generate meaningful cash flows to address the balance sheet. In 2023, the construction of a new heap leaching operation at the Las Calandrias South deposit, capable of supporting annual production in the 25-30K oz range once at full capacity, was completed. The mine also undertook the pre stripping required to open up the Calandrias North deposit to send to the CIL plant. The operations are on target to sustain historical production rates of between 50-60K ozs per annum going forward at reduced cash costs relative to previous years. In addition, the Company is evaluating the potential to develop a second smaller heap leach operation near the current Martinetas CIL plant to process known stockpiles and low grade resources as well as to expand the current heap leach capabilities. Exploration activities remain ongoing to develop both new high grade (open pit or underground) and low grade resources for heap leaching as can be seen at the various nearby operating mines in the region.

In addition to the MDN producing gold mine, Cerrado also owns 100% of the Mont Sorcier Iron Ore project located just outside of Chibougamau, Quebec held by its fully owned subsidiary, Voyager Metals. A Preliminary Economic Assessment completed in 2022, outlined a project producing 5 million tonnes of 65% grade iron concentrates over a 21-year mine life with an initial NPV of US$1.6 billion. The project benefits from significant rail and port facilities already being in place, reducing substantially customary capital requirements. Historical results assumed the production of iron concentrates grading 65%, however, recent test work has demonstrated the ability to produce high purity, DRI grade material grading 67% iron, capable of being used in the Direct Reduction Injection steel production process. DRI grade iron receives a material premium in the market due to the significant environmental benefits of reducing green house gas emissions in the steel making process and are taking market share from conventional lower grade iron ore materials. Cerrado is currently working towards completing a bankable feasibility study to move the project forward based on the improved metallurgical test results. The robust nature of this project has resulted in the Company already being able to mandate TD Bank as lead arranger for a UK Export Credit Agency supported project financing for up to US$598 million to cover 70% of required upfront capital (see Cerrado press release dated November 21, 2023).

Amendment to Sellers Agreement at MDN
Additionally, the Company has signed on March 3, 2024 an amendment to the purchase greement for the Minera Don Nicolas Project with Compañía Inversora en Minas S.A. and
Compañía Inversora Argentina Para La Exportación S.A. (together, the "Sellers"). The amendment allows for the balance of funds presently due to be paid from the escrow account to the Sellers by March 16, 2024 (corresponding to the Third Installment), being approximately $2.686 million, will instead be paid to the Sellers by June 7, 2024. Regarding the Final Installment, the monthly instalments due under Section 4.1 in respect of April 2024 through March 2025, will be reduced by 50%.

The balance of payments due in respect of April 2024 through March 2025 will be paid by as a lump sum payment of $5.0M by no later than March 28, 2025.

About Hochschild Mining PLC
Hochschild Mining PLC is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) and crosstrades on the OTCQX Best Market in the U.S. (HCHDF), with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over fifty years' experience in the mining of precious metal epithermal vein deposits and operates two underground epithermal vein mines: Inmaculada, located in southern Peru; and San Jose in southern Argentina, and an open pit gold mine, Mara Rosa, located in the state of Goiás, Brazil. Hochschild also has numerous long-term projects throughout the Americas.

About Cerrado
Cerrado Gold is a Toronto-based gold production, development, and exploration company focused on gold projects in South America. The Company is the 100% owner of both the producing MDN and Las Calandrias mine in Santa Cruz province, Argentina, and the MDC Project, located in Tocantins State, Brazil. In Canada, Cerrado Gold is developing it's 100% owned Mont Sorcier Iron Ore and Vanadium project located outside of Chibougamou, Quebec.

In Argentina, Cerrado is maximizing asset value at its MDN operation through continued operational optimization and is growing production through its operations at the Las Calandrias Heap Leach project. An extensive campaign of exploration is ongoing to further unlock potential resources in our highly prospective land package in the heart of the Deseado Masiff.

In Brazil, Cerrado has rapidly advanced the Serra Alta deposit at its MDC Project, through feasibility and into production. Serra Alta is expected to be a high-margin and high-return project with significant exploration potential on an extensive and highly prospective 82,542 hectare land package.

In Canada, Cerrado holds a 100% interest in the Mont Sorcier Iron Ore and Vanadium project, which has the potential to produce a premium iron ore concentrate over a long mine life at low operating costs and low capital intensity. Furthermore, its high grade and high purity product facilitates the migration of steel producers from blast furnaces to electric arc furnaces contributing to the decarbonisation of the industry and the achievement of SDG goals.

For more information about Cerrado please visit our website at: www.cerradogold.com.

Mark Brennan
CEO and Chairman

Mike McAllister
Vice President, Investor Relations
Tel: +1-647-805-5662
mmcallister@cerradogold.com

Disclaimer
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

This press release contains statements that constitute "forward-looking information" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements contained in this press release include, without limitation, statements regarding the business and operations of Cerrado, the completion of the Proposed Transaction including receipt by Cerrado of the Consideration, the Second Anniversary Payment and the Third Anniversary Payment, anticipated production growth at the MDN, the Company's short term working capital requirements, and the completion of a feasibility study for the Company's Mont Sorcier Iron Ore project. In making the forward- looking statements contained in this press release, Cerrado has made certain assumptions, including, but not limited to the satisfactory completion of due diligence by Amarillo and the exercise of the Option by Amarillo, the satisfaction of all conditions to closing of the Proposed Transaction, including the receipt of all required approvals (including regulatory and shareholder approval), cash flow generated from MDN and changes in economic and monetary policies and regulations in jurisdictions in which Cerrado and its subsidiaries operate. Although Cerrado believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurance that the expectations of any forward-looking statements will prove to be correct. Known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Except as required by law, Cerrado disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

SOURCE: Cerrado Gold Inc.