Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aris Mining Corp (ARMN, Financial) produced 49,000 ounces of gold in Q2 and 99,983 ounces in H1 2024.
- Generated a half-year adjusted EBITDA of $64.5 million and adjusted earnings of $18.1 million or $0.12 per share.
- Segovia operations generated a significant all-in sustaining margin of $60.6 million in H1, contributing to funding expansion projects.
- The drilling program at Segovia continues to deliver high-grade intersections, confirming the continuity and extensions of large-scale veins.
- The expansion projects at Segovia and Marmato remain on track, with an expected annual gold production rate of approximately 500,000 ounces by the second half of 2026.
Negative Points
- Experienced an unplanned seven-day plant maintenance shutdown in April, affecting H1 production.
- Cash costs for untitled CMPs rose by 11% in Q2, driven by a 12% increase in realized gold prices.
- Higher cash costs for third-party CMPs due to increased gold prices and higher-grade material delivery.
- Full-year cash costs per ounce at Segovia are now expected to range between $1,125 to $1,225, up from prior guidance of $975 to $1,075.
- Full-year 2024 ASIC per ounce at Segovia is now expected to range between $1,400 to $1,500, up from prior guidance of $1,225 to $1,325.
Q & A Highlights
Q: First on Segovia, you did 9.2 grams in the first half. You've mentioned you're back into higher grades. We're halfway through Q3. I'm just wondering what sort of grades we should be expecting in Q3 and maybe into Q4.
A: It goes from 9.3 up to 9.8. Towards the end of the year, we're looking at 10.2 grams a ton.
Q: On Marmato, I think your original guidance was to spend something like $140 million. It looks like maybe you're tracking a bit behind on the spending. How do we think about capital spending at Marmato in the second half of the year?
A: Up until now, we've been doing a lot of ground preparation, earthworks, so the big expenditures haven't come in yet. But as we ramp up in the second half of this year, we're buying a lot of our milling equipment. We are commencing the [D-time] development as of probably very close to this month, so the expenditures will begin to ramp up in the second half of this year.
Q: Do you have a sense of how much we should budget for the second half in terms of capital?
A: I would have to get some better information and get that back to you.
Q: Just on the grade at Segovia, from your partners, obviously a big step up in grade. Do you have any visibility into that, or is that -- you just kind of get what you get from them?
A: We have some visibility of it, and we are increasing our contract mine partner, how can is say, assistance or support infrastructure to be able to help planning and ventilation, rock mechanics, and geology to assist them and to assist us to be able to be planning our future production.
Q: Are you seeing any potential inflationary pressures with respect to Marmato development?
A: We had just reviewed our capital about a month ago. We reviewed our capital. A lot of our costs had been tied into the equipment. We understand those very well. They had been locked in, and a lot of prepayments had been made for the deposits, so we're pretty confident on the equipment for the mill. The process infrastructure, we've got good quotes on that, and the development, we understand that very well. That, of course, will be reliant on the ground conditions we meet, but so far we're pretty confident of the $280 million to date.
Q: Of the $250 million or so remaining, how much of that is locked into fixed-price contracts?
A: At the moment, the (technical difficulty) locked in, and the plant is definitely locked in, so that's [30 plus 70, but about 100] of that is definitely locked in.
Q: You said Marmato is 22% complete now on the construction. Is that roughly where you expect it to be? Are you on schedule with your timeline?
A: We are slightly ahead on the portal development, so we expect it to be, yes.
Q: The original CapEx for the mill expansion at Segovia was $11 million. You said it's now going to be $15 million. That $4 million, was that all scope changes or is any of that sort of cost escalation versus the original budget?
A: It was scope changes. The area where the expansion is located is on a laterite area. We expected our foundations for much of the equipment to be about nine meters deep. However, when we got down to nine meters, we didn't find bedrock. We had to go down a further 10 meters, and that increase in those foundations is accounting for the extra $4 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
