Aris Mining Corporation

Good morning, everyone, and welcome to the ARIS Mining Full Year 2024 Results Call. We will begin with an overview for management, followed by a question and answer period. To join the question queue, you may press star then one on your telephone keypad. As a reminder, all participants are in listen-only mode, and the conference is being recorded. If you need assistance during the conference call, you may signal an operator by pressing star then zero. Please note that the accompanying presentation the management will refer to during today's call can be found in the events and presentation section of Eris Mining's website at erismining.com. Eris Mining has filed financial reports for the fourth quarter and full year 2024 on Cedar Plus and EDGAR. These reports can also be found on the Eris Mining website. I would now like to turn the conference over to Mr. Neil Woodyer, Chief Executive Officer. Please go ahead.

Thank you, operator, and welcome, everyone. Thank you for joining us for our full year 24 earnings call. Today, I'm joined by members of the management team, including Richard Thomas, Richard Orizetti and Oliver Detson. We look forward to addressing your questions at the end of this call. But before we dive into the results, please note the cautionary statements on slide two, as we'll be making several forward looking statements today. Starting on slide three, I'm pleased to report that Q4 was a strong quarter, delivering our highest production for the year of 57,364 ounces. We generated 22 million of net income and 67 million of EBITDA in the fourth quarter. At Segovia, we reduced all the staining costs to 1485, and achieved an organ sustaining margin of 58 million, which is a 32% increase over Q3. We remain on track to commission the expanding processing facility at Segovia in the second quarter of this year. Following that, a gradual ramp up from 2,000 tonnes per day to 3,000 tonnes per day throughout the remainder of the year. This year, Segovia is targeting annual production 210,000 to 250,000 ounces and in the range of 300,000 ounces from 2026 onwards. We've also been exploring opportunities to scale up Marmato's current expansion into a higher capacity operation by way of upgrading the carbon and pulp processing facility by 25% to 5,000 tonnes per day. We're also looking at expanding our CMP business model at the upper mine flotation processing facility. Together, these upgrades and expansions are expected to increase Mamato's annual production potential to more than 200,000 ounces. But Richard Thomas will be giving more information about that later on in the presentation. Growing cash flow generation and refinancing of our senior notes in October last year contributed to a year-end cash balance of 253 million. We're well positioned and funded to deliver on our growth strategy. We expect to achieve an annual gold production rate of more than 500,000 ounces once our expansions and operations are fully wrapped up to name plate capacities. With that, I'll now hand you over to Richard, our COO. Thank you, Neil.

Moving on to slide four. For the full year, we produced 211,000 ounces from our mines, with 188,000 ounces of gold from Segovia and 23,000 ounces of gold from the Ramada upper mine. As Neil mentioned, quarter four was our standout quarter, delivering our highest gold production of the year at 57,364 ounces. At Segovia, a modest increase in throughput in quarter four, combined with a 7% rise in average gold grade processed at Segovia, 9.484 grams a tonne, resulting in a gold production of 51,477 ounces, an 8% increase compared to the Q3 results. Despite an 8% higher realized gold cost, all its standing costs reduced by 4% to $1,485 per ounce compared to Q3. Owner mining all its standing costs improved to $1,386 per ounce in Q4, from the 1451 balancing quarter fee, while contract mining partner Segnant generated the highest quarterly, all expanding cost sales, margin of 59%. With that, I'll pass on to Richard Orenzetti to cover our financial results and then provide an update on our growth projects. Thank you, Richard.

Turning to slide five, as Neil said at the outset, we had a very strong quarter, especially when compared to the third quarter of 2024. World revenue of 148.9 was up 13% compared to the third quarter driven by higher realized gold price of 26.42 per ounce and higher quarter over quarter sales volumes resulting from higher production. Both are by the revenue growth and a strong focus on cost control. Income from mining operations increased 42% quarter over quarter to 54 million. Net earnings for the fourth quarter were 21.7 million compared to a net loss of 2.1 million. This was primarily due to the increase in income from mining operations, as well as a gain of $6.6 million on financial instruments and a $5.1 million FX gain recognized in the quarter. Adjusted earnings in the fourth quarter were $24.7 million, or $0.14 per share, compared to $13.1 million, or $0.08 per share in the third quarter. earlier, the increase in realized gold price, higher production, and our continued focus on cost control supported a meaningful expansion in the ASIC margin in the fourth quarter out of Segovia operations. Our quarterly ASIC margin reached a three-year high of $58 million, up 32% from $44 million in the prior quarter. For the full year of 2024, the Segovia operations generated an ASIC margin of $163 million. While we enjoy the strong gold price environment, we will remain focused on operational efficiencies and keeping costs low. Now moving on to slide seven, I'd like to discuss some key items on our cash flow statement. For the full year 2024, our goal revenue totaled $499 million when we generated a basic margin of $154 million. The adjusted sustaining margin after tax, G&A, together with working capital changes amounted to $66 million, supporting the funding of $157 million of our growth projects. including $83 million at Marmado, mainly for the Lower Marmado project, and $65 million at Segovia operations, primarily for the processing plant and underground development and exploration. In the fourth quarter, our after-tax adjusted sustaining margin of $49 million more than covered our expansion and growth capital of $42 million. In addition, financing activities in the fourth quarter generated a cash inflow of $164 million, including $136 million in net proceeds from refinancing the 2026 bonds with a new issue of five-year 2029 bonds and a $40 million inflow for wheat precious metals stream pertaining to the Marmada Lower Mine project. We ended the year with a cash balance of $253 million up from $195 million at the end of 2023.

Thank you, Richard. Now moving on to slide eight. Segovia process plant expansion has progressed as scheduled and as previously discussed, phase one of the Segovia expansion is complete. The new expanded receiving area for our CMP is fully commissioned and handed over to operations and working well. Phase 2, which involves installation of a formal contractor receiving area, is underway with commissioning, expected in quarter 2 this year as scheduled. Following the ramp-up period, we expect to reach a production rate of about 300 tonnes per day by the end of 2025, enabling Sogoda to produce 210 and 250,000 ounces of gold in 2025, and in the range of 300,000 ounces of gold from 2026 onwards, as per our guidance released earlier in January. The total cost of Sagoma's processing plant expansion project is still estimated at $50 million and at the end of the year last year we had spent $8.5 million. If we could move on to slide 9 please. I'd like to provide an update on our construction progress at the Momoto Lower Mine. As you can see from the photographs on this slide, the construction of Lower Mine continues to advance with firstly the access roads to the Lower Momoto Process Facility and the accommodation camp now 100% completed. Secondly, a decline in development underway with 200 metres completed by the end of February 2025 and the processing plant foundation earthworks 12% ahead of schedule as of the end of February 2025. At the beginning of this year, we initiated an engineering assessment to evaluate whether we could expand the plant, the current CIP plant currently under construction as a result of a and expanded 5,000 tons per day, whilst also expanding our CNP business model, increasing the feed and average grade to the existing upper-mine flotation plant, thereby further increasing the gold production. With the completion of these expansions, we expect Mamato to be able to produce in the range of 200,000 ounces of gold per year, which compares to the previous life of mine average of only 162,000 ounces per year. If we can move to slide 10, please. As you can see from the drawing on this slide, the key enhancements required to take the throughput from 4,000 tons a day to 5,000 tons a day are straightforward as the upgraded 5,000 tons per day design will use major components from the current 4,000 tons per day design, while also integrating some high capacity components, installing the secondary crushing unit, adding an extra leach tank to support the increased throughput, and accelerating certain project components into the initial capital phase. expect this render to begin at h2 2026. moving on to style 11 as of february 2025 we have spent 75 million dollars on construction the estimated cost to complete the revised construction taking the throughput from 4 000 to 5 000 tons per day is 290 million dollars bringing the total upfront cost to 365 million 85 million over the previous construction plan the 25 percent bigger plant requires bringing forward the tailings facility construction and the backflow plant into the upfront capital and this is estimated at 50 million dollars we have also opted to build a 20 million dollar power grid power line instead of relying on the third party power purchase agreement the process plant announcement that i mentioned earlier namely integrating some high capacity components a secondary crushing circuit and adding an extra reach tank to support the increased throughput are expected to cost around about 10 million Importantly, the net construction cost to ARIS is 208 million, considering the remaining stream funding of 82 million. In our view, this is a very attractive investment proposition, being able to meaningfully increase production of a long-life asset for limited incremental capital, against the backdrop of the record-high gold prices. Looking ahead with the new Monmato and the expansion of Segovia, ARIS is targeting an annual production rate of more than 500,000 ounces of gold. With that, I'd like to hand over the floor to Oliver.

Thank you, Richard. Turning to slide 12, I'd like to summarize our previously disclosed guidance for 2025. Eris Mining expects consolidated gold production of between 230,000 to 275,000 ounces in 2025, with in progress expansion projects to contribute to production growth in 2025 and beyond. With 2025 gold production expected to range between 210,000 to 250,000 ounces at our Segovia operations, the company anticipates a significant increase in Segovia's on-sustaining cost margin this year of more than US$230 million, using the midpoint of our 2025 guiding ranges at a gold price of US$2,600 per ounce. This compares to an on and sustaining cost margin of $163 million at Segovia in 2024. In 2025, production from the Segovia operations will be sourced approximately 50% to 55% from owner mining and 45% to 50% from mill feed purchased from contract mining partners. For the owner mining segment, the on and sustaining cost per ounce sold is expected to range between $1,450 to $1,600 per ounce, and the CMP segment is expected to achieve an on and sustaining cost sales margin of 35% to 40%. The 2025 cash cost and on and sustaining cost guidance have been provided separately for the two segments, owner mining and CMPs, given their distinct primary cost drivers. Owner mining costs are primarily driven by conventional expenses, such as labor, consumables, such as explosives and fuel, and power. In contrast, C&P costs are mainly influenced by the cost of purchasing mill feed, which depends on material volume, recoverable Distinguishing between owner mining and CMP cost metrics is necessary given the current rise in gold prices and the resulting challenge in forecasting CMP costs. As a result, we believe the CMP segment is best presented on a sales margin basis to provide a clear representation of its financial performance. The Mammato Upper Mine produced 23,000 ounces in 2024, and a similar production level is expected for 2025, while construction of the new large-scale lower mine, which will access wider port through mineralization, continues. Ares Mining will resume providing cash costs and on-sustain cost guidance for the Mamato mine when the lower mine achieves commercial production. Now, especially for our credit investors on the line, slide 13 highlights and summarizes the strength of our balance sheet. Strong liquidity of 253 million US dollars, low net leverage of 1.5 times, insignificant near-term debt maturities, and a solid equity cushion sitting below our debt as evidenced by our gearing ratio. Importantly, total and net leverage ratios have already started trending down compared to when we issued our 2029 bonds in October last year from 3.1 times and 1.7 times respectively. I now like to hand the call back to Neil to conclude our prepared remarks.

Thank you, Oliver. We now move to slide 14. But before opening the Q&A session, I'd like to summarise key takeaways that we've reported for this fourth quarter and for the full year. In Q4, we recorded our highest quarterly production at 57,000 ounces. We expect total production in 2025 to range between 230 and 275,000 ounces, which is up from 211,000 last year. We see meaningful margin expansion as evidenced by our quarterly all-in-sustaining cost margin of £58 million in Q4, increasing by 32% over the prior quarter. We're in a strong financial position with cash balance of £253 million, £82 million still to be funded by Wheaton under the Momato stream, and growing cash generation from Segovia. To close, Aris Mining is on track to more than double annual production to 500,000 ounces, and we have the means and the team to deliver that growth. With that, we look forward to your questions, and I'd like to turn the call back to the operator to open the line for questions.

Thank you. To join the question queue, you may press star then the one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To answer all your questions, please press star then two. Today's first question comes from Kerry McCurry with Canaccord Genuity. Please go ahead.

Hi, good morning, guys. Just wondering if you could give us some color on how long you've been thinking about this expansion and sort of why now, I guess.

I think we've been thinking about the expansion for well over a year. When we started construction, we were following the plan that had been originally set up by SRK and then going on from there. That plan made sense to us, but as we got to know the upper mine more, we realized two things. It would not achieve the performance that had originally been anticipated, but it was a huge potential for the small miners. So we started to reshape our thinking on the basis that our license is limited to 2 million tons a year as to whether we could increase the more profitable material from the lower mine. So we've been thinking about it for some time and put the analysis strictly into play at the beginning of this year.

Okay, thanks. And maybe just on the capital, can you give us a sense of how much capital we should expect this year versus next year or further expansion? Thank you.

Thank you. And as a reminder, if you would like to ask a question, please press star then 1 at this time. We'll pause for just a moment to assemble our roster. And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Whittier for any closing remarks.

thank you operator and thank you everybody for joining us and if you more information please contact Oliver who will be more than happy to take you through any more details thank you very much everybody we appreciate your attendance thank you thank you sir this brings to a close today's conference call you may disconnect your lines and we thank you for participating have a pleasant day