ARIS MINING TO INCREASE OWNERSHIP IN SOTO NORTE PROJECT TO 51% AND COMMENCES STUDY TO ASSESS NEW DEVELOPMENT PLAN
Aris Mining will increase its ownership in the Soto Norte gold-copper project in Colombia to 51% by acquiring an additional 31% stake from Mubadala. This will involve issuing 15,750,000 shares to Mubadala, with an additional 6,000,000 shares to be issued upon receiving an environmental license. The new smaller-scale development plan for Soto Norte aims to reduce the environmental footprint, extend operating life, prioritize high-grade zones, and integrate contract mining partners. The transaction, expected to close in June 2024, will see Aris Mining sole-funding certain pre-licensing costs and integrating the PSN development team into its operations.
- Aris Mining to gain majority control (51%) of Soto Norte project, enhancing decision-making.
- Issuance of shares rather than cash minimizes immediate financial strain.
- New development plan aims to reduce environmental footprint.
- Potential for long-term operational efficiencies and synergies.
- Smaller processing plant with extended operating life expected to be more cost-efficient.
- Integration with contract mining partners could enhance project sustainability.
- Anticipated reduction in upfront capital requirements with new mining methods.
- Issuing 21,750,000 shares will result in shareholder dilution.
- High dependency on obtaining an environmental license for full transaction benefits.
- Sole funding certain pre-licensing costs increases financial burden on Aris Mining.
- Termination of an option to acquire an additional 30% stake could limit future expansion.
Insights
Aris Mining's move to increase its ownership in the Soto Norte project to 51% is a significant development. This gives the company a controlling interest, which enhances its strategic and operational control over one of the largest undeveloped underground gold projects in South America. The issuance of
From a financial perspective, the plan to adopt a smaller, more efficient development approach is prudent. Reducing upfront capital expenditure by scaling down the processing plant and using technologies like ropeways and paste backfill could lead to better capital efficiency and potentially higher returns on investment. However, investors should monitor the completion of the Pre-Feasibility Study (PFS) and the receipt of the environmental license, as these are critical milestones for the project's progress.
In the short term, the market may react positively to Aris Mining gaining a controlling stake and implementing a more efficient development plan. In the long term, the project's success will depend on the execution of these optimized plans and the ability to navigate regulatory and environmental challenges in Colombia.
The strategic shift to a smaller-scale development plan for the Soto Norte project is a significant operational adjustment. By prioritizing access to higher-grade zones and adopting long hole open stoping (LHOS), Aris Mining aims to optimize ore recovery and reduce waste management complexities. This approach could enhance the project's profitability by extracting higher-value ore early in the mine's life.
The use of an aerial ropeway for transporting mill feed and tailings is an innovative solution that could cut down on both environmental footprint and capital expenditure compared to traditional tunnel boring methods. This technology, already in use in Colombia, demonstrates adaptability to local conditions and could expedite the construction timeline significantly.
Integrating the PSN development team into Aris Mining's management structure should bring operational synergies. However, actual performance will depend on effective integration and resource management. The ongoing support to contract mining partners (CMPs) is another positive aspect, fostering local partnerships and sustainable mining practices, which can improve community relations and reduce illegal mining activities.
- Acquisition of
51% of PSN and Share Exchange: Aris Mining will acquire an additional31% joint venture interest in PSN from Mubadala, bringing its total ownership to51% . In exchange, Aris Mining will issue 15,750,000 shares to Mubadala, representing an approximate9.9% ownership stake based on Aris Mining's issued and outstanding shares as of March 31, 2024, with an additional 6,000,000 shares to be issued on receipt of an environmental license for PSN. - New, Smaller-Scale Development Plan: Aris Mining has completed optimization studies of a smaller, more efficient development plan for PSN. Key changes include reducing the environmental footprint, building a smaller processing plant with a longer operating life, adopting a flexible mining method to target higher-grade material earlier in the mine life, and installing a paste backfill plant to minimize surface tailings storage requirements.
- Strategic and Operational Benefits: With a
51% controlling interest, Aris Mining will integrate the PSN development team into its management structure and procedures, enhancing operational efficiencies and creating synergies.
Aris Mining CEO Neil Woodyer stated: "As the only mining company with operational experience to own and operate Soto Norte, we believe a new, smaller-scale development plan with a reduced environmental footprint is the right path forward. Aris Mining also plans to incorporate processing solutions for contract mining partners into the design and development of Soto Norte, following the successful partnership model developed at our Segovia Operations in
In support of this plan, we are delighted to become the
Soto Norte Transaction
- On closing, Aris Mining will issue 15,750,000 common shares to Mubadala. These shares will be subject to a 12-month hold period, inclusive of a four-month statutory hold period and an additional eight-month contractual restriction on transfer.
- Following receipt of an environmental license to develop PSN, Aris Mining will issue an additional 6,000,000 common shares to Mubadala, which together with the 15,750,000 common shares issued at closing would increase Mubadala's ownership stake to approximately
13% based on Aris Mining's issued and outstanding shares as of March 31, 2024. - The current market value of the 21,750,000 Aris Mining shares to be issued to Mubadala is
US .$90 million - On closing, Aris Mining will hold a
51% interest in PSN and Mubadala will retain a49% interest. The current option held by Aris Mining to acquire an additional30% interest in PSN will be terminated. Aris Mining will continue to be the operator of PSN. - Aris Mining and Mubadala have mutual right-of-first-offer (ROFO) rights, should a partner choose to exit the joint venture.
- As a result of Aris Mining integrating the PSN development team into its management structure and procedures, Aris Mining will sole fund certain operating costs on behalf of the joint venture during the pre-licensing period. Non-operating and project construction costs will be funded on a pro-rata ownership basis.
- Closing of the transaction is expected to occur in June 2024 following satisfaction of customary closing conditions, including execution of definitive documentation related to the issuance of the shares and approval of the Toronto Stock Exchange and the NYSE American.
In March 2022, Aris Mining disclosed the results of mineral resource and reserve estimates and the results of a Feasibility Study for the Soto Norte Gold Project in a NI 43-101 compliant Technical Report with an effective date of January 1, 2021 (the Feasibility Study). The Feasibility Study includes a 7,200 tonnes per day (tpd) capacity processing plant with average annual production of over 450,000 gold ounces (oz) over an 11-year production period at average all in sustaining costs (AISC) of
In 2023, Aris Mining commissioned a technical and economic assessment of PSN that considered a scaled-down mining concept. Aris Mining is now commissioning a new PFS and NI 43-101 compliant Technical Report for the scaled-down concept, both of which are expected to be completed in Q1 2025. The new PFS will include the assessment of the key project optimizations described in Table 1.
Table 1: Key project optimizations to be evaluated in the new PFS
Optimized underground mining strategy prioritizes initial access to a higher grade zone | There are two main parallel mineralized zones at PSN and each has a strike length of approximately 2.0 km. The revised underground mining strategy prioritizes initial access to the higher grade zone, which can be quickly accessed from an existing portal.
The revised plan is expected to sustain a mining rate approaching 2.0 million tonnes of mill feed and waste per year. |
Change of mining method | The mining method for the Feasibility Study was modified Avoca, which required a significant amount of additional waste, sourced from underground waste quarry stopes, to provide backfill and a base for mining.
The proposed mining method for the new PFS is long hole open stoping (LHOS) targeting higher grade stopes in the upper levels of the mine early in the mine life and utilizing pillars for support in the first stage of mining. Paste backfill will be utilized in the second stage of mining while the support pillars are systematically extracted. |
Defer underground paste fill plant | After installation of the paste fill plant, the mining method is proposed to change to LHOS and paste fill, to increase overall mining recovery while reducing the upfront capital requirement. |
Smaller processing plant | The proposed processing plant is expected to have a 2,750 tpd capacity, approximately |
Aerial ropeway proposed to move mill feed from the existing portal to the processing plant | Elimination of the 6.9 km tunnel, which was to be created by way of a tunnel boring machine (TBM), accelerating construction timelines and reducing capital costs. Ropeway technology is currently in use in |
Reduced size and relocation of | The new PSN design considers the use of process tailings as backfill in the underground stopes, significantly reducing the surface tailings storage capacity requirements and environmental footprint. |
Shortened construction period | The Feasibility Study estimated a 3.5-year construction period, with the critical path highly dependent on the TBM advance rate. The new PSN development plan will not utilize a TBM, resulting in an accelerated construction period. |
Environmental studies | The new, smaller-scale development plan is expected to reduce the environmental impact of PSN and is expected to remain mostly within the Feasibility Study project footprint covered by the existing environmental baseline studies and datasets. |
Páramo proximity | PSN remains outside the Santurbán páramo delimitation area. |
Opportunity for Contract Mining Partners (CMPs) | Aris Mining has a successful partnership model with CMPs that combines the traditional skills and local knowledge of artisanal and small-scale miners with the technology, infrastructure, health/safety standards, and access to capital of industrial miners.
Aris Mining intends to incorporate processing solutions for CMPs into the design and development of PSN, with the potential to formalize miners in the Soto Norte region in addition to Calimineros, an existing partner at PSN with about 160 miners. Aris Mining's CMP model eliminates the use of mercury and illegal explosives by artisanal miners, creating an ecosystem that benefits CMPs, local communities, the Colombian government, the environment, and Aris Mining. |
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1 See "Technical Disclosure and Qualified Person" section below for full disclosure of technical and scientific details. |
Management will host a conference call on Thursday, May 23, 2024, at 9:00 am ET / 6:00 am PT to discuss this transaction. The call will be webcast and can be accessed at Aris Mining's website at www.aris-mining.com, or at https://services.choruscall.ca/links/arismining202405.html.
Participants may gain expedited access to the conference call at the following registration link. Upon registering, call in details will be displayed on screen. Using these call details will by-pass the operator and avoid the call queue. Registration will remain open until the end of the live conference call.
Participants who prefer to dial-in and speak with a live operator, can access the call by dialing:
- Toll-free
North America : 1-844-763-8274 - International: 1-647-484-8814
After the call, an audio recording will be available via telephone for 7 days, until end of day May 30th, 2024. The recording can be accessed by dialing:
- Toll-free in the US and
Canada : 1-855-669-9658 - International: 1-604-674-8052 and using the access code: 0915#
A replay of the event will be archived at Aris Mining Corporation – Investors – Events & Presentations (www.aris-mining.com).
The technical information in this news release was reviewed and approved by Pamela De Mark, P.Geo, Senior Vice President, Geology and Exploration of Aris Mining, who is a Qualified Person as defined by NI 43-101. Unless otherwise indicated, the mineral resource and reserve estimates, scientific disclosure, and technical information included in this news release are based upon information included in the following NI 43-101 compliant technical report: "NI 43-101 Technical Report Feasibility Study of the Soto Norte Gold Project, Santander,
Aris Mining is a gold producer in the
Aris Mining promotes the formalization of artisanal and small-scale mining into contract mining partners as this process enables all miners to operate in a legal, safe and responsible manner that protects them and the environment.
Additional information on Aris Mining can be found at www.aris-mining.com, www.sedarplus.ca, and on www.sec.gov.
This news release contains "forward-looking information" or forward-looking statements" within the meaning of Canadian securities legislation. All statements included herein, other than statements of historical fact, including, without limitation, the acquisition of additional joint venture interest in PSN and the details and timing thereof, plans pertaining to PSN and the details, costs, benefits and timing thereof, the PFS and the expected timing thereof and the timing and details thereof and the Company's plans and strategies are forward-looking. Generally, the forward-looking information and forward looking statements can be identified by the use of forward looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", "will continue" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". The material factors or assumptions used to develop forward looking information or statements are disclosed throughout this news release.
Forward looking information and forward looking statements, while based on management's best estimates and assumptions, are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Aris Mining to be materially different from those expressed or implied by such forward-looking information or forward looking statements, including but not limited to those factors discussed in the section entitled "Risk Factors" in Aris Mining's annual information form dated March 6, 2024 which is available on SEDAR+ at www.sedarplus.ca and in the Company's filings with the SEC at www.sec.gov.
Although Aris Mining has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information or statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information or statements. The Company has and continues to disclose in its Management's Discussion and Analysis and other publicly filed documents, changes to material factors or assumptions underlying the forward-looking information and forward-looking statements and to the validity of the information, in the period the changes occur. The forward-looking statements and forward-looking information are made as of the date hereof and Aris Mining disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements or forward-looking information contained herein to reflect future results. Accordingly, readers should not place undue reliance on forward-looking statements and information.
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SOURCE Aris Mining Corporation
FAQ
What is the new ownership percentage of Aris Mining in Soto Norte?
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What are the key changes in the new development plan for Soto Norte?
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