Mr. Mark Brennan of Cerrado Gold reports

CERRADO GOLD TO ACQUIRE ASCENDANT RESOURCES INC

Cerrado Gold Inc. has entered into a definitive agreement with Ascendant Resources Inc., pursuant to which Cerrado will acquire all of the issued and outstanding shares of Ascendant not already owned by Cerrado by way of a plan of arrangement under the Business Corporations Act (Ontario). Upon completion of the arrangement, Cerrado will indirectly own an 80-per-cent interest in the Lagoa Salgada project located in Portugal.

Highlights:

• Cerrado is building undervalued world-class assets to drive significant cash flow;
• Attractive opportunity to acquire 80 per cent of the robust Lagoa Salgada VMS (volcanogenic massive sulphide) project with an after-tax net present value (NPV) of $147-million (U.S.) and a 39-per-cent internal rate of reuturn (IRR) in current feasibility study;
• Adds substantial precious metal and critical mineral exposure (34 per cent silver and gold, 30 per cent zinc, 15 per cent copper, 14 per cent lead and 7 per cent tin);
• Expected lowest-cost quartile production with all-in sustaining cost (AISC) of 59 U.S. cents per pound zinc equivalent for the first five years;
• Underexplored asset with extensive exploration potential;
• Optimized feasibility study due in Q3, construction decision by year-end 2025 and initial production expected in second half of 2027;
• Limited equity dilution required to bring Lagoa Salgada to production;
• Cerrado current cash position of $21-million (U.S.) budgeted to end year flat after all capital expenditures and debt reduction; projected cash balance does not include payment of $15-million due from asset sale to Hochschild and potential $10-million option payment from Anglo Gold;
• EIA (environmental impact assessment) approval expected in Q2 2025 and optimized feasibility study in Q3 2025;
• Construction well supported with low-cost export credit agency project financing with Tier 1 lenders, support from Sprott and potential offtakers to move the project into production;
• Management to host conference call to discuss transaction on Feb. 3, 2025, at 10 a.m. EST.

Under the terms of the arrangement agreement, Ascendant shareholders would receive one common share of Cerrado for every 7.8 common shares of Ascendant. The exchange ratio is approximately equal to the closing prices of the Ascendant shares and Cerrado shares as of close on Jan. 30, 2025. Upon closing, the arrangement would result in Ascendant shareholders owning approximately 21 per cent of the Cerrado shares outstanding upon closing of the arrangement. Cerrado will issue 27.7 million shares for the transaction and will have approximately 131.3 million issued and outstanding shares following completion of the transaction.

Transaction rationale

Lagoa Salgada is a well advanced, long-life, low-cost polymetallic VMS project, with gold and silver accounting for approximately 34 per cent of net smelter return royalty, located in the prolific Iberian pyrite belt. In 2023, ascendant completed a feasibility study in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects, on Lagoa Salgada, which outlined a project with an after-tax NPV of $147-million (U.S.) and IRR of 39 per cent, generating approximately $75-million (U.S.) per annum in free cash flow over the first five years of operations. A new optimized feasibility study is anticipated to be completed by late summer.

Lagoa Salgada has been awarded project of national interest status from the government of Portugal and approval of the recently submitted environmental impact assessment (EIA) is expected in the coming months. Ascendant is currently advancing an optimized feasibility study expected to further improve the project economics and be in a position to undertake a construction decision by year-end. The optimization study has focused on improved metallurgical results and reducing upfront capital requirements to support an inversion in the NPV to capex (capital expenditure) ratio (see the press release of Ascendant dated Dec. 11, 2024). Ascendant also continues to make significant progress with construction financing with access to low-cost export credit agency project financing supported by the United Kingdom export credit agency and Banco Santander for up to 70 per cent of capital expenditures.

Lagoa Salgada is well known to the Cerrado team and the arrangement is expected to offer a number of significant benefits to Cerrado, including:

• Attractive valuation for a robust, well-defined, lowest-quartile-cost project with substantial near-term value creation opportunities;
• Adds further precious metal exposure (approximately 34 per cent of Lagoa net smelter return royalty) and additional critical minerals ownership to Cerrado;
• Project is expected to generate more than $75-million (U.S.) per year of cash flow once in operation, based on the existing feasibility study;
• Cerrado is well financed to complete the planned optimized feasibility study as well as progress exploration at the highly prospective Lagoa Salgada project, unlocking near-term value for all shareholders;
• Construction decision expected in Q4 2025;
• With financing requirements of less $5-million to deliver a construction decision, Cerrado has budgeted to exit 2025 with more than $20-million in cash based on current operating and development budgets and debt reduction (not including payments due to Cerrado from Hochschild of $15-million from asset sale and potential $10-million option payment from Anglo Gold);
• Development and construction schedule converges well with timeline of Cerrado's existing portfolio at Minera Don Nicolas gold operations and planned development of the Mont Sorcier iron project.

Recommendations

The transactions (as defined below) have been unanimously approved by the members of the respective boards of directors of Cerrado and Ascendant eligible to vote thereon. In the case of Ascendant, the board of directors approved each of the transactions upon receipt of the recommendation of its lead independent director, who served and functioned as the special committee. In connection with the recommendation, Stifel Nicolaus Canada Inc. provided a fairness opinion to the special committee, stating that, based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration offered pursuant to the arrangement is fair, from a financial point of view, to the Ascendant shareholders.

Mark Brennan, chief executive officer and chairman of Cerrado, commented: "Cerrado has spent the last nine months improving its balance sheet and positioning the company with a strong financial and operating position; it has budgeted its current $21-million (U.S.) cash position to remain at current levels following completion of all of its capital expenditure programs (including Lagoa Salgada) as well as further debt reduction scheduled for 2025."

He continued: "The acquisition of Lagoa Salgada is a tremendous opportunity for Cerrado to add a world-class, low-cost asset with strong cash flow potential and create significant value as well as support our longer-term development plans without compromising our financial strength and current operations. The existing value and significant near-term exploration potential at Lagoa Salgada is well understood by management who see the opportunity to bring the Lagoa project to a construction decision this year with current funding and banking support. Furthermore, the acquisition will provide minimal dilution for all shareholders of the combined company. We are excited that Lagoa Salgada is expected to be the next producer on the Iberian pyrite belt."

In connection with the arrangement, Cerrado has entered into a subscription agreement with Ascendant, pursuant to which it will subscribe for Ascendant shares for gross proceeds of $900,000 in cash at a price of 5.25 cents per Ascendant share. Sprott Private Resources Streaming and Royalty (Collector) LP has agreed to invest the Canadian-dollar equivalent of approximately $1,660,172 (U.S.) of accrued and deferred interest owing by Ascendant to it under a secured note by satisfying the payment of the deferred interest with the issuance of Ascendant shares at a price of 5.25 cents per Ascendant share. The Ascendant shares to be issued under the private placements will be at a price of 5.25 cents per Ascendant share. Upon completion of the Cerrado private placement, Cerrado would be expected to hold in aggregate approximately 14.5 per cent of the then issued and outstanding Ascendant shares (on a non-diluted basis). The Sprott private placement will be completed in two tranches. Upon the completion of the first tranche, Sprott would be expected to hold in aggregate approximately 19.9 per cent of the then issued and outstanding Ascendant shares (on a non-diluted basis). Completion of the second tranche will be subject to shareholder approval in accordance with the rules of the Toronto Stock Exchange. Assuming the requisite shareholder approval is obtained, upon completion of the second tranche, Sprott would be expected to hold in aggregate approximately 25.6 per cent of the then issued and outstanding Ascendant shares (on a non-diluted basis). The Cerrado private placement and the first tranche of the Sprott private placement are expected to be completed within the next two weeks, subject to satisfying all conditions to closing, including TSX and TSX Venture Exchange approval. The arrangement and the private placements are together referred to herein as the transactions.

Additional transaction details

The arrangement

The transaction resulting in the proposed business combination between Cerrado and Ascendant will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The arrangement will require approval by 66-2/3rds per cent of the votes cast by the shareholders of Ascendant at a special meeting of Ascendant shareholders to be held following receipt of an interim order of the Ontario Superior Court of Justice. Holders representing in aggregate 14.5 per cent of the issued and outstanding Ascendant shares as of the date of the arrangement agreement, including each of Ascendant's directors and officers and Sprott, as well as other shareholders, have entered into voting support agreements, pursuant to which they have agreed to vote their common shares held in favour of the arrangement, subject to certain conditions. In addition, shareholders representing an aggregate of 14.5 per cent of the outstanding Ascendant shares have provided written non-binding indications of support for the arrangement. Cerrado currently owns approximately 8.8 per cent of the outstanding Ascendant shares, which it will be entitled to vote in respect of the arrangement. Following the closing of the private placements (to the extent described below), the total number of shares held by shareholders that have signed voting support agreements or provided written non-binding indications of support, together with the Ascendant shares issued under the private placements that are entitled to vote and Ascendant shares held by Cerrado, would represent, in aggregate, approximately 53.4 per cent of the then issued and outstanding Ascendant shares (on a non-diluted basis), all of which are expected to vote for the arrangement at the Ascendant special meeting.

In connection with its approval of the arrangement, the board of directors has approved certain amendments to the terms of the Ascendant options, pursuant to its omnibus security-based incentive plan, that will permit the conditional exercise of all outstanding options by holders in accordance with the terms of such plan (such exercise be conditional upon the consummation of the arrangement) and accelerate the expiration date of outstanding options that are out of the money and have not been conditionally exercised prior to the effective date of the arrangement, such that any such options will expire as immediately prior to the arrangement. It is expected that holders of options that are outstanding at the effective time of the arrangement will receive replacement options of Cerrado that will be exercisable for Cerrado shares as adjusted by the exchange ratio. Holders of warrants of Ascendant will automatically be entitled to receive Cerrado shares, as adjusted by the exchange ratio, upon exercise of the warrants of Ascendant in accordance with the terms and conditions of the certificates evidencing the outstanding Ascendant warrants.

The arrangement agreement includes customary representations, warranties, covenants and conditions and certain other provisions, including non-solicitation provisions and other deal protection clauses, subject to the right of Ascendant to accept a superior proposal in certain circumstances, with Cerrado having a five-business day right to match any such superior proposal. The arrangement agreement also provides for a termination fee payable to Cerrado in the amount of $1.2-million if the arrangement agreement is terminated in certain specified circumstances and for Ascendant to be entitled to a payment of $400,000 in respect of reimbursement of expenses if the arrangement agreement is terminated in certain specified circumstances. Also in connection with the arrangement, Cerrado and Ascendant have agreed to amend the terms of outstanding loans owed by Ascendant to Cerrado pursuant to certain promissory notes and a shared services agreement between the parties. As amended, each of the loans will mature on demand by Cerrado on a date no earlier than the earlier of: (i) the date that is 366 days from the date of notice of repayment; and (ii) if applicable, the date upon which a change of control (as defined in such notes) of Ascendant occurs.

In addition to the required shareholder and court approvals described above, the arrangement is subject to the acceptance by the TSX in respect of Ascendant and the TSX-V in respect of Cerrado. The private placements are also subject to acceptance by the TSX and Cerrado's participation in the Cerrado private placement is subject to the approval of the TSX-V. Each of the transactions are also subject to the satisfaction of certain other closing conditions customary in transactions of this nature.

The private placements

The arrangement agreement contemplates the completion of the private placements prior to the consummation of the arrangement. Ascendant expects that the private placements will effectively raise aggregate gross proceeds for Ascendant in the amount of $3,292,972, which is expected to be realized through a combination of cash to Ascendant and the satisfaction of accrued interest owing by Ascendant, in exchange for the issuance of approximately 62,723,274 Ascendant shares to be issued at 5.25 cents per Ascendant share. Each of the definitive agreements related to the private placements contain representations, warranties, covenants and conditions customary for transactions of a similar nature. The common shares to be issued pursuant to the private placements will be subject to a statutory four-month hold period from the date of issuance in accordance with applicable Canadian securities legislation.

The Cerrado private placement

Cerrado has entered into a subscription agreement with Ascendant to subscribe for 17,142,857 Ascendant shares for gross proceeds of $900,000. Cerrado currently holds a total of 16,417,625 Ascendant shares, which represents approximately 8.78 per cent of the issued and outstanding Ascendant shares (on a non-diluted basis). Upon completion of the Cerrado private placement (which is contemplated to occur contemporaneously with the completion of the first tranche of the Sprott private placement) (as described below)), Cerrado would be expected to hold in aggregate 33,560,482 Ascendant shares representing approximately 14.5 per cent of the then issued and outstanding Ascendant shares (on a non-diluted basis and considering the concurrent issuance of the Tranche 1 deferred interest shares (as defined below) under the Sprott private placement).

The proceeds of the Cerrado private placement are expected to enable Ascendant to further advance its ongoing development of the Lagoa Salgada project in Portugal and to finance certain other short-term payable obligations and for general corporate purposes, including certain transaction-related costs, during the interim period of the arrangement.

The Sprott private placement

Sprott has agreed to convert the total amount of deferred interest under the Sprott note into Ascendant shares at 5.25 cents per Ascendant share. As of the date hereof, the deferred interest amounts to approximately $1,660,172 (U.S.), which is equal to approximately $2,392,972 at an exchange rate of $1.4414 to $1 (U.S.).

The conversion of the deferred interest at 5.25 cents per Ascendant share will result in the issuance of approximately 45,580,417 Ascendant shares to Sprott in full satisfaction of the outstanding deferred interest. Sprott currently owns and controls 18,482,411 Ascendant shares, which represents approximately 9.9 per cent of the issued and outstanding Ascendant shares (on a non-diluted basis). Accordingly, it is anticipated that, upon issuance of the deferred interest shares, Sprott would acquire in aggregate ownership and control of a total of 64,062,828 Ascendant shares, which is expected to represent approximately 25.65 per cent. Accordingly, the Sprott private placement will be completed in two tranches, pursuant to which a portion of the deferred interest would be converted into deferred interest shares that would result in Sprott acquiring ownership and control of approximately 19.9 per cent of the issued and outstanding Ascendant shares immediately following that first tranche closing and the contemporaneous closing of the Cerrado private placement. The conversion of the remaining deferred interest into deferred interest shares that would result in Sprott acquiring ownership and control over 20 per cent or more of the outstanding Ascendant shares would be subject to shareholder approval, in accordance with TSX rules, which would be sought at the Ascendant special meeting.

The Sprott private placement will improve Ascendant's current financial situation by enabling it to extinguish a significant portion of short-term payable in respect of the deferred interest without deploying any cash resources.

Timing

The Cerrado private placement and the Tranche 1 deferred interest shares to be issued under the Sprott private placement are expected to be completed on or about Feb. 11, 2025, and in any event as promptly as possible following receipt of the conditional approval of the TSX and approval of the TSX-V.

The arrangement agreement will be filed on the profiles of Ascendant and Cerrado on SEDAR+.

Advisors and counsel

WeirFoulds LLP is legal counsel to Cerrado. Stifel Nicolaus Canada Inc. acted as financial adviser to the special committee of Ascendant and Sotos LLP is legal counsel to Ascendant.

Conference call details

Cerrado Gold management will host a conference call on Feb. 3, 2025, at 10 a.m., to discuss the details of the proposed transaction and take stakeholder questions. The presentation for the call can be found on Cerrado Gold's website. Call details are as follows.

Preregistration for conference call

Participants can preregister for the conference on-line and will receive dial-in numbers to connect directly upon registration completion.

Those without Internet access or unable to preregister may dial in by calling the following numbers.

Participant dial-in (toll-free) number:  1-844-763-8274

Participant international dial-in number:   1-647-484-8814

Review of technical information

The scientific and technical information from Minera Don Nicolas in this press release has been reviewed and approved by Cid Bonfim, PGeo, senior geologist of Cerrado Gold, and Pierre Jean LaFleur, PGeo, vice-president, exploration, for Voyager Metals, a 100-per-cent-owned subsidiary of Cerrado Gold, are qualified persons as defined in NI 43-101.

About Cerrado Gold Inc.

Cerrado Gold is a Toronto-based gold production, development and exploration company focused on gold projects in South America. The company is the 100-per-cent owner of both the producing Minera Don Nicolas and Las Calandrias mine in Santa Cruz province, Argentina. In Canada, Cerrado Gold is developing its 100-per-cent-owned Mont Sorcier iron ore and vanadium project located outside of Chibougamou, Que.

In Argentina, Cerrado is maximizing asset value at its Minera Don Nicolas 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 continuing to further unlock potential resources in the company's highly prospective land package in the heart of the Deseado massif.

In Canada, Cerrado holds a 100-per-cent 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 decarbonization of the industry and the achievement of sustainable development goals.

We seek Safe Harbor.