Aris Mining: the share price is attractive (TSX:ARIS:CA)

Investment thesis

1 – Presentation

The Canada-based Aris Mining Company (OTCQX: TPRFF) owns Segovia operations And the Marmato mine in Colombia, the company’s main producing assets.

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

Aris Mining is a leading Latin American gold producer with two producing mines, a gold project in Colombia, the Soto Norteand an important project in Guyana called the Toroparu project and the Juby project inOntario, Canada.

The latest update is listed below.

The Segovia mine in Colombia is the most important means of production.

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

Reserves for the Segovia mine Are 4.9 Au Moz. Production guidance for 2023 is also now available 230K to 270K Ouch 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 production results for the first quarter of 2023 on May 10, 2023 and provided guidance for 2023.

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

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

Segovia Operations’ processing facility was expanded to 2,000 tons per day (tpd) in late 2022, but a minor fire caused by a maintenance procedure resulted in throughput averaging 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	1st quarter 2022	2nd quarter 2022	3rd quarter 2022	4th quarter 2022	1st quarter 2023
Segovia operations	49,864	53,077	54,630	52,592	46,513
Marmato Overmine	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 230,000 Au Oz and 270,000 Au Oz, with all-in maintenance costs per ounce (“AISC/oz”) between $1,050 and $1,150.

Operation	Segovia operations	Marmato Overmine	consolidated
Gold production in us	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 underperformed the VanEck Vectors Gold Miners ETF (GDX), falling 12.2% year over year.

Aris Mining – Historical snapshot end 1Q23 – The Raw Numbers.

Great Columbia	1Q22	2Q22	3Q22	4Q22	1Q23
Total sales 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 expenditures 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. short-term) 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 now paid monthly/quarterly in $/share.	0.034	0.034	0.034

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Data source: Business expense. (More details available to subscribers only).

Analysis: earnings, revenue data, free cash flow, debt.

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

The company announced first-quarter revenue of $96.91 million, down 4.4% from the year-ago quarter 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. Adjusted earnings were $11.2 million or $0.08 per share.

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

Adjusted EBITDA for the first quarter was $38.6 million.

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

The remaining free cash flow of 12 months is a loss of $42.02 million, with 1Q23 Free Cash Flow of $0.01 million.

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

Remark: The LT debt, including current, excludes long-term and current warrant liabilities 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 Map

Remark: 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 out-of-pocket cost of $922 per ounce, and all-in support costs (“AISC”) of $1,214 per ounce in 1Q23.

Technical analysis (short term) and commentary

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

Downward channel patterns are short term bearish in that a stock moves lower within a down channel, but they often form within longer term uptrends as continuation patterns. Higher prices usually follow the descending channel pattern, but only after an upward penetration of the upper trendline.

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

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

Watch the gold price like a hawk.

Warning: The TA map needs to be updated regularly to be relevant. It’s what I’m doing in my stock tracker. The chart above has a possible validity period of approximately one week. Remember that the TA chart is only a tool to help you follow the right strategy. It is not a way to predict the future. No one and nothing can.

Editor’s Note: This article discusses one or more securities that are not traded on any major U.S. exchange. Be aware of the risks associated with these stocks.