Aris Mining: The Stock Price Is Attractive (TSX:ARIS:CA)

Investment Thesis

1 – Presentation

The Canada-based Aris Mining Corporation (OTCQX: TPRFF) owns Segovia operations and the Marmato Mine in Colombia, the company’s principal producing assets.

Note: On September 28, 2022, GCM Mining Corp. (GCM Mining) and Aris Gold Corporation (Aris Gold) completed their business merger.

Aris Mining is a leading Latin American gold producer with two producing mines, a gold project in Colombia, the Soto Norte, and a significant project in Guyana called the Toroparu Project and the Juby Project in Ontario, Canada.

Below is indicated the last update.

The Segovia mine in Colombia is the flagship producing asset.

On March 3, 2023, the updated mineral resource and reserve estimates were announced, effective December 31, 2022, which includes full replacement of gold ounces mined during 2022.

Reserves for the Segovia Mine are 4.9 Au Moz. Also, production guidance for 2023 is now 230K to 270K Au oz at an AISC of between $1,050 and $1,150 per ounce, as indicated in the Presentation below:

Important note: This article updates my February 23, 2023, article. I have been following TPRFF on Seeking Alpha since January 2021.

2 – 1Q23 Production results snapshot and commentary

The company reported its first-quarter 2023 production results and provided 2023 guidance on May 10, 2023.

In April 2023, Aris Mining completed the repairs at the processing plant and achieved a throughput of 2,097 TPD to exceed the 2,000 tonne-per-day nameplate capacity.

Aris Mining produced 50,903 ounces of gold from the Segovia Operations and the Marmato Upper Mine, with 18% of the total contained gold sourced via the purchase of mill-feed from partnerships with small-scale miners around the Segovia Operations. In the M&A release:

The Segovia Operations processing facility was expanded to 2,000 tonnes per day (tpd) in late 2022, but a small fire caused by a maintenance procedure resulted in throughput that averaged 1,785 tpd in Q1 2023, holding back gold production. Required repairs have been completed and throughput averaged 2,097 tpd in April 2023.

2.1 – Gold Production and Sales by Quarter

Operation	Q1 2022	Q2 2022	Q3 2022	Q4 2022	Q1 2023
Segovia Operations	49,864	53,077	54,630	52,592	46,513
Marmato Upper Mine	7,419	7,411	5,176	5,210	4,390
Total Gold Production	57,283	60,488	59,806	57,802	50,903
Total Gold Sales	61,343	61,583	59,336	59,157	49,158

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2.2 – 2023 Guidance

Aris Mining’s consolidated gold production for 2023 is expected to be between 230K Au Oz and 270K Au Oz, with all-in sustaining costs per ounce (“AISC/oz”) between $1,050 to $1,150.

Operation	Segovia Operations	Marmato Upper Mine	Consolidated
Gold Production in Ounces	200,000 – 230,000	30,000 – 40,000	230,000 – 270,000
Cash Cost (US$/oz)	$650 – $750	$1,100 – $1,200	$700 – $800
AISC (US$/oz)	$950 – $1,050	$1,650 – $1,750	$1,050 to $1,150
Exploration (US$ million)	$17	$2	$19

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3 – Stock Performance

TPRFF has underperformed the VanEck Vectors Gold Miners ETF (GDX) and is down 12.2% on a one-year basis.

Aris Mining – Historical Snapshot ending 1Q23 – The Raw Numbers.

Gran Colombia	1Q22	2Q22	3Q22	4Q22	1Q23
Total Revenues In $ Million	101.32	101.37	93.91	103.36	96.91
Net Income in $ Million	5.24	38.97	-48.35	4.77	-5.40
EBITDA $ Million	35.18	73.48	-21.02	35.87	23.60
EPS diluted in $/share	0.05	0.15	-0.48	-0.04	-0.04
Operating Cash Flow in $ Million	24.21	31.53	8.28	12.94	19.77
Capital Expenditure in $ Million	20.26	35.27	28.83	30.65	19.76
Free Cash Flow in $ Million	3.95	-3.75	-20.55	-17.71	0.01
Total Cash $ Million	315.06	265.50	325.74	299.46	229.35
Total Long-term Debt (incl. current) In $ Million	311.31	310.90	376.58	429.94	373.29
Shares outstanding -(diluted) in Million	99.96	108.13	101.00	144.91	136.19
The dividend is paid per month now/ Quarterly dividend in $/share.	0.034	0.034	0.034

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Data Source: Company release. (More data available for subscribers only).

Analysis: Revenues, Earnings Details, Free Cash Flow, Debt.

1 – Total Revenues and others were $96.91 million in 1Q23

The company announced first-quarter revenues of $96.91 million, down 4.4% from the same quarter a year ago and down 6.2% sequentially. The company posted a net loss of $5.40 million compared to an income of $5.24 million last year. The adjusted earnings were $11.2 million or $0.08 per share.

The spot gold price in the first quarter of 2023 was $1,869 per ounce sold, compared with an average of $1,860 per ounce sold in 1Q22.

The first-quarter adjusted EBITDA was $38.6 million.

2 – Free cash flow was a loss of $0.01 million in 1Q23

The trailing 12-month free cash flow is a loss of $42.02 million, with free cash flow in 1Q23 of $0.01 million.

3 – Aris Mining’s net debt was $143.94 million at the end of the 1Q23

Note: The LT Debt, including current, is not including the warrant liabilities long-term and current for a total of $22.694 million.

Production Analysis

1 – Production was 50,903 Au Oz in 1Q23 (including Marmato Mine)

1.1 – Gold and Silver production: Historical chart

Note: Gold sold in 1Q23 was 49,158 Au Oz.

1. Sandra K mine.
2. Providencia mine.
3. El Silencio mine.

2 – AISC and Gold Price Realized per Oz Sold

Total cash costs of $922 per ounce, and all-in sustaining costs (“AISC”) of $1,214 per ounce in 1Q23.

Technical analysis (short-term) and commentary

TPRFF forms a descending channel pattern with resistance at $2.55 and support at $2.28.

Descending channel patterns are short-term bearish in that a stock moves lower within a descending channel, but they often form within longer-term uptrends as continuation patterns. Higher prices usually follow The descending channel pattern but only after an upside penetration of the upper trend line.

The trading strategy is to sell about 30% between $2.50 and $2.60 with higher resistance at $2.70 and accumulate between $2.30 and $2.20 with lower support at $2.00.

For those who have decided to keep a long-term position, I strongly recommend trading LIFO while holding a core long-term position for a potential test of $3.80 or higher.

Watch the gold price like a hawk.

Warning: The TA chart must be updated frequently to be relevant. It is what I am doing in my stock tracker. The chart above has a possible validity of about a week. Remember, the TA chart is a tool only to help you adopt the right strategy. It is not a way to foresee the future. No one and nothing can.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.