Author: Atrium Research August 19, 2026
Nicholas Cortellucci, CFA | Equity Research Analyst | [email protected] | 647-391-3314
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What you need to know:
- CERT continued to expand production at MDN in Q2 with 15.4Koz AuEq, marking a +20% QoQ increase.
- Q2 reflected a +22% QoQ rise in revenue generation, which was offset by higher-than-forecast costs.
- Production is expected to be H2-weighted, facilitating 2026 production at the high-end of guidance and sustained strong cash flow
- We recently initiated research coverage on Cerrado Gold. Read the full report here.
Cerrado Gold Inc. (CERT:TSXV, CRDOF:OTCQX) released its Q2 financials aftermarket, followed by a conference call this morning. Production was pre-reported, and revenue climbed as expected; however, costs came in above our forecast. That said, incremental improvements continue to expand production at MDN, which should facilitate production at the top of guidance, moderate costs, and sustain strong cash flows. We are maintaining our BUY rating and target price of C$3.50/share on Cerrado Gold.
Revenue and costs both rose. Revenue of $64.6M broadly aligned with our $63.1M forecast (+2%), increasing +22% QoQ from $53.0M on higher sales. Production costs of $29.7M came in above our expectation for $24.2M ($20.0M in Q1), resulting in income from mining operations of $22.9M vs. our $26.9M, and adjusted EBITDA of $28.2M vs. our $32.8M forecast (-14%). Net income of $9.2M was below our $16.2M estimate ($12.9M in Q1), reflecting higher-than-forecast taxes, partly offset by a gain on FX and remeasurement of MDN’s stream obligation.
AISC increased QoQ from $1,348/oz to $1,933/oz, which was above our expectation for an increase to $1,673/oz; however, within the $1,800-$2,000/oz range the Company has targeted for MDN through 2028. Cash costs of $1,783/oz compared to 1,277/oz in Q1. Cost pressure included significant wage inflation and higher fuel costs in Argentina, and CERT anticipates costs will come down as production continues to ramp up, supplemented by recently implemented costcutting initiatives. We expect the updated PEA early next year will provide visibility on longer-term cost expectations in tandem with an extended mine life.
Production forecast at the top end of guidance. Q2’s production of 15.4Koz AuEq reflected a +20% QoQ increase from 12.8Koz, and operational improvements continue to drive higher production MoM. 2026 guidance of 50-60Koz has been reiterated; however, 28.3Koz in H1 is tracking at ~57% to the midpoint, and production is anticipated to be H2-weighted, with management indicating an increasing likelihood for production at the higher end. We are forecasting 2026 production of 59.5Koz and see an opportunity to beat with further growth.
Strong cash flow expected to be sustained. As discussed in our initiation report (read here), cash flow from MDN is anticipated to strengthen the balance sheet and fund organic growth, including at CERT’s development assets, which we continue to view as significantly undervalued. Q2’s OCF (pre-WC) of $20.0M remained strong QoQ and compared to our $26.3M forecast, significantly up YoY from $5.6M. Capital expenditure totalled $23.2M, and CERT remained in a solid cash position with $25.3M ($31.4M at the end of Q1). Operational improvements, current gold prices, and now unhedged production are expected to allow MDN to sustain strong cash flows.
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Atrium Research Ratings System
BUY: The stock is expected to generate returns of over 20% over the next 24 months.
HOLD: The stock is expected to generate returns of 0-20% over the next 24 months.
SELL: The stock is expected to generate negative returns over the next 24 months.
NOT RATED (N/R): Atrium does not provide research coverage on the respective company.
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