Aris Mining Targets 500K oz in 2026 as Arbitration Deal Clears the Path

Key Concepts

• Arbitration Dispute Resolution: The process of settling a legal disagreement through a neutral third party.
• Host Government Agreement: A contract between a mining company and the government of the country where the mine is located.
• Environmental Impact Statement (EIS): A document that assesses the potential environmental effects of a proposed project.
• Paramo: A high-altitude Andean ecosystem, crucial for water regulation and biodiversity.
• Small-Scale Mining Integration: Incorporating artisanal and small-scale miners into larger mining operations.
• Prefeasibility Study: An early-stage study to assess the technical and economic viability of a mining project.
• Cash Flow: The net amount of cash and cash equivalents being transferred into and out of a company.
• Sustaining Margin: The profit generated from ongoing mining operations after accounting for operational costs.

Aris Mining: Strategic Advancements and Future Outlook

This summary details the key announcements and strategic developments of Aris Mining, as discussed by CEO Neil Woodier at the National Bank of Canada Capital Markets CEO Mining Conference. The company has made significant progress in resolving legacy issues and advancing its development pipeline, positioning itself for substantial production growth.

Resolution of Arbitration Dispute with the Government of Colombia

• Background: In 2018, Grand Columbia (now Aris Mining) initiated a $350 million arbitration claim against the Colombian government. The claims were based on the government's alleged failure to facilitate access to the "Sarah Burrow" area (above Marmato) and provide adequate security protection at Segovia.
• Negotiation Process: Aris Mining shifted from arbitration to negotiation two years prior to the agreement, seeking a mutually beneficial resolution.
• Agreement Details: The agreement, formalized last week, addresses two main points:
  • Formalization of the Upper Area: The "Sarah Burrow" area will be formalized and integrated into the existing Marmato plant operations.
  • Enhanced Security Protection: Agreements have been reached with the police and army to increase security at Segovia.
• Significance: This marks the first commercial agreement of its kind between Colombia and a mining company regarding an arbitration dispute, indicating a positive step in host government relations.
• Government Assurance: The agreement is legally binding for 10 years, with a dedicated working party involving the justice and defense departments to oversee its implementation. This structure is designed to ensure continuity across government changes, as a new president will take office in August 2026.

Acquisition of Remaining Stake in Soto Norte Development Project

• Transaction: Aris Mining has acquired the remaining 49% stake in the Soto Norte development project in Santander, Colombia, bringing its ownership to 100%.
• Timing and Motivation: The resolution of the arbitration dispute and the positive engagement with Colombian government agencies played a crucial role in providing the confidence to proceed with this acquisition. The recent prefeasibility study for Soto Norte also aligned well with these discussions.
• Environmental Considerations (Soto Norte):
  • Location: Soto Norte is explicitly stated to be not located within the paramo, pre-paramo, or buffer zones.
  • Water Management: The project's water flows are separate from the paramo's and do not co-mingle. Aris Mining will utilize only about 2% of the river's water and return 95%, demonstrating a minimal impact.
  • Environmental Impact Statement (EIS): The company is preparing to submit its EIS. The project's footprint has been redesigned, requiring additional ecological surveys and drilling. The EIS submission is anticipated around May of next year, with an estimated two-year approval period.

Integration of Small-Scale Miners

• Model Development: Aris Mining has successfully implemented a model for integrating small-scale miners at its Segovia and Marmato operations.
• Segovia Example: At Segovia, 2,500 small miners are organized into approximately 40 groups, contributing about 40% of the mine's production. This partnership leverages the miners' local knowledge and community support with Aris Mining's access to capital, technology, and operating standards.
• Marmato Application: The same concept has been applied to Marmato, where small miners have been mining for 450 years. Aris Mining is formalizing these operations and handing over parts of the upper mine.
• Soto Norte Plan: For Soto Norte, the company plans to build 120% of its projected capacity. 20% of this capacity will be allocated to small miners through formalized contracts, allowing them to mine their own production alongside Aris Mining's estimated 250,000 ounces.
• Benefits: This approach offers economic advantages by improving the value of material and spreading fixed costs. Crucially, it provides a strong social license to operate, which was a contributing factor to the government's favorable stance in the arbitration.

Board Appointment: Bridget Baptiste

• Expertise: Bridget Baptiste, Director of the EN University in Colombia and an environmentalist, has joined Aris Mining's board. She was formerly a director of the Humboldt Institute, which was instrumental in defining the boundaries of the Santa Paramos.
• Role and Experience: Baptiste is a recognized thought leader in Colombia, advocating for mining as a tool for environmental conservation. Her extensive experience with the paramo ecosystem and the mining sector from an environmental perspective is considered invaluable.
• Previous Collaboration: Aris Mining has collaborated with EN University and Baptiste for the past two to three years on social programs, including social research, community engagement, and educational initiatives for small miners and management teams.
• Strategic Value: Her appointment is seen as a significant asset, bringing a unique understanding of environmental and social issues to the company's strategic decision-making.

Production Growth and Development Pipeline

• Segovia Operations:
  • Milling capacity has been increased from 2,000 to 3,000 tons per day, completed in June.
  • The company is ramping up mining to achieve its target of 300,000 ounces per year.
  • Production was approximately 180,000 ounces last year, projected to be 250,000 this year, and 300,000 next year.
• Marmato Underground Development:
  • Construction of the lower mine began over a year ago with a budget of approximately $380 million, with $250 million remaining to be spent.
  • Expenditure is projected at $50 million per quarter.
  • The first gold pour is expected in the latter part of next year.
  • The initial design was for 4,000 tons per day, increased to 5,000 tons per day nine months ago.
  • Production is expected to reach 4,000 tons per day within six to nine months of commencement, quickly scaling to 5,000 tons per day.
  • This will contribute an additional 200,000 ounces to production.
• Combined Production Target: With Segovia producing 300,000 ounces and Marmato contributing 200,000 ounces, Aris Mining anticipates reaching a combined production of 500,000 ounces per year.
• Toro Peru Project (Guyana):
  • A Preliminary Economic Assessment (PEA) yielded positive results.
  • A prefeasibility study is underway, expected to be completed around October next year.
  • The company is exploring ways to accelerate the construction timeline, currently estimated at three years due to the remote location and logistical challenges.
  • A production decision is anticipated in October/November next year.
  • The project is expected to be financed internally.
• Soto Norte Timeline: Due to the need for a new EIS and further studies, Soto Norte's development timeline is longer than Toro Peru's. The EIS submission is expected in May next year, followed by a two-year approval process.

Financial Position and Outlook

• Cash Reserves: As of the last quarter, Aris Mining held $418 million in cash.
• Acquisition Costs: $60 million was spent acquiring the Soto Norte stake.
• Segovia Cash Flow: Segovia is generating strong cash flow, with a trailing 12-month sustaining margin of $330 million and $120 million in the last quarter.
• Capital Deployment: The company is spending approximately $50 million per quarter on the Marmato lower mine development, which is less than the cash generated by Segovia.
• Additional Financing: Aris Mining expects to draw an additional $80 million from its stream agreement with Wheaton Precious Metals.
• Toro Peru Financing: The company anticipates needing approximately $800 million for Toro Peru and believes it can finance this internally, contingent on reasonable gold prices.

2026 Goals and Year-End Objectives

• 2026 Vision: Aris Mining aims to be a 1 million ounce per year gold producer.
• Year-End Objectives (Next Year):
  • Segovia: Producing nearly 300,000 ounces per year.
  • Marmato: Completing the first gold pour and ramping up production.
  • Toro Peru: Completing the prefeasibility study and preparing for construction.
  • Soto Norte: Submitting the EIS and engaging with agencies for approval.

Conclusion: Aris Mining is undergoing a significant transformation, marked by the successful resolution of a major arbitration dispute, the consolidation of key development assets, and a clear strategy for integrating small-scale miners. With a robust development pipeline and a strong financial position, the company is well-positioned to achieve its ambitious production growth targets and become a leading gold producer in the region.