Aris boosts gold production in Colombia

Aris Mining (TSX: ARIS; NYSE: ARMN) says expansion of its two Colombian mines will start delivering increased output as soon as this year.

Consolidated gold production is projected to rise to between 230,000 and 275,000 oz. in 2025, Vancouver- and Bogota-based Aris said in its fourth-quarter earnings report in March. This compares with 210,955 oz. last year. 

“Aris Mining is on track to more than double annual production to 500,000 oz. and we have the means and the team to deliver that growth,” CEO Neil Woodyer told analysts on a conference call March 13. 

Organic growth 

The company is increasing the throughput capacity by 50% of its processing plant at Segovia, its biggest mine and one of the highest-grade mines in the world, with an average reserve grade of 10.8 grams per tonne. Commissioning of the expanded processing facility is scheduled for this year’s second quarter, with the installation of the second ball mill underway, Woodyer added.  

According to Aris, production at Segovia is expected to rise to between 210,000 and 250,000 oz. this year compared to 188,000 oz. last year. Annual output will be in the range of 300,000 oz. starting in 2026, the company added. This growth profile is a function of a gradual ramp-up from 2,000 tonnes per day (tpd) to 3,000 tpd for the remainder of this year once the expansion has been completed. 

Last year, the Marmato Upper Mine produced about 23,000 ounces. To raise Marmato’s production capacity to more than 200,000 oz. of gold a year requires the completion of the Marmato Lower Mine, which will have a throughput capacity of 5,000 tonnes per day; as well as expanding the Contract Mining Partner business to work with local small-scale mining groups at the Upper Mine. Output at Marmato Lower Mine is expected to start ramping up in the second half of 2026, Aris said.  

“With new Marmato and the expansion at Segovia, Aris is targeting an annual production greater than 500,000 oz. a year,” Don DeMarco, an analyst at National Bank Financial, said in a note to investors last month. The average target price based on estimates from National Bank, BMO, Canaccord and Cormark is C$10.63. 

Aris shares gained 2.6% on Monday morning in Toronto to C$6.68 apiece, giving the company a market capitalization of C$1.14 billion. The stock has traded in a 52-week range of C$4.54 to C$6.97. 

Contract Mining Partners  

Colombia’s gold mining industry is hundreds of years old and to this day largely informal. Local miners have been mining at Segovia for about 300 years and about 450 years at Marmato, Woodyer told The Northern Miner Podcast in an interview. 

As one of the few industrial scale mine operators in the country and with its assets located in mining districts, Aris has designed and fine tuned a mutually beneficial business model over many years to not just coexist but collaborate with small-scale mining groups, known as Contract Mining Partners (CMPs). 

This business model helps CMPs establish formal, well equipped contract mining companies and enter into long-term contracts with Aris to purchase their mill feed and process it at the company’s facilities.  

“We purchase the mill feed based on a formula linked to gold contained, grade and the prevailing gold price at the time of delivery, thus helping CMPs avoid the black markets, formalize, and access international trading channels,” Woodyer added. 

Production from the Segovia operations in 2025 will be sourced about 50% to 55% from owner mining, Aris said last month. Mill-feed purchased from CMP will make up 45% to 50%. 

Segovia’s processing plant can produce materially more gold if it processes the mill feed from the CMPs compared to what the CMPs could achieve on their own. Segovia has a recovery rate of 95%, compared to a 45% to 50% recovery rate the informal sector can achieve, according to the company. That incremental production allows the CMPs to be better off while also being an attractive business for Aris.  

At a gold price of $3,000 per oz., Aris generates an all-in sustaining cost (AISC) sales margin of about $1,125 per oz. from the CMP business. And that incremental production also allows Aris to spread Segovia’s fixed cost over more ounces, making every ounce more profitable. 

But not only the CMPs and Aris are better off, the Colombian government benefits by way of increased tax revenues. As does the environment given that processing at Segovia results in environmental damage mitigation, compared to the alternative of informal processing, Woodyer said.  

 “There’s a lot of environmental damage [from informal processing]. They’re using mercury,” he said. “They’re not cleaning the tailings up, [and] they’re being dumped into rivers. They’re moving on when an area has been fouled because of the lack of investment in processing.” 

Small business generator   

Aris says its partnership program empowers local miners to build their own mining businesses by sharing geological, technical, and mine planning knowledge. Aris staffers also offer training on proper procedures and sometimes provide working capital financing.  

“We have contracted with 40 groups of mining partners to formalize, and we help them on health and safety,” Woodyer said in the podcast interview. These CMPs range in size between 50 to 500 employees.  

“We have an education program with a university where 2,500 small miners are on the web to learn their trade better. They have a lot of skills that we don’t have. Putting their strengths with our strengths of industrial mining, our processing, our access to capital, our health and safety, our compliance, if you can put those two sides together, you have a very, very strong partnership.” 

And since Colombia’s government is looking to formalize mining, “we’ve totally aligned with their objectives,” Woodyer added. “This has become an integral part of our business in Colombia because the potential is so huge.”  

Third gold miner 

Having founded Endeavor Mining (LSE, TSX: EDV; US-OTC: EDVMF) in 2009 and Leagold in 2016, Aris is the third gold mining company led by Woodyer. The three companies share how Woodyer pursued a buy-and-build strategy to scale them. But when he compares Aris to his prior two companies at the same point in time about four years into building the company, Aris has the strongest asset base.

Woodyer points to the scale: 7 million oz. in proven and probable reserves and 19.9 million oz. in measured and indicated resources plus an incremental 10 million oz. in the inferred category, as well as the grade of its properties. 

Aside from Segovia and Marmato, Aris controls 51% of the Soto Norte development project in Santander, Colombia and all of the Toroparu gold-copper project in Guyana. Aris initially acquired a 20% stake in Soto Norte from Mubadala Investment, an Abu Dhabi sovereign wealth fund, in 2022 and an additional 31% last year.  

“Soto Norte is probably the best undeveloped gold development project in Latin America, with 8.5 million oz. of gold resources measured and indicated at 5.5 grams per tonne,” he said. 

This asset portfolio is the base to build a leading gold mining company in Latin America, “the Endeavour Mining of Latin America” according to Woodyer. 

Strong financial foundation 

At the end of 2024, Aris had $253 million of cash and cash equivalents compared with $195 million a year earlier. Growing cash flow generation from Segovia and refinancing of the company’s senior notes in October contributed to the increased cash balance, Woodyer said.  

AISC margins at Segovia hit a three-year high of $58.3 million in the fourth quarter. That’s a 32% improvement over the third quarter due to improved efficiency, cost control and higher realized gold prices, which gained about 28% last year. For the full year 2024, Segovia generated an AISC margin of $163 million.  

Higher output this year should drive a significant increase in Segovia’s AISC margin to more than $230 million (assuming a gold price of $2,600/oz), Aris said. That guidance appears conservative as the yellow metal has been trading at much higher levels, as press time neared gold was quoted at $3,018.90 per oz.

Also, under the Marmato streaming agreement with Wheaton Precious Metals, $82 million remains to be funded to support development work at Marmato. Considering all this, Aris has the means to more than double annual production to 500,000 oz., Woodyer said.