Aris Mining (TSX:ARIS) Q1 2026 Earnings Call

0:00 Good morning, everyone, and welcome to the Aris Mining First Quarter twenty twenty six Results Call. We will begin with an overview from management followed by a question and answer period. As a reminder, all participants are in listen only mode and the conference is being recorded. Please note that the accompanying presentation that management will refer to during today's call can be found in the Events and Presentations section of the ARIS Mining website at ariesmining.com.

0:48 First quarter twenty twenty six financial reports for ARIS Mining have been filed on SEDAR plus and EDGAR and can also be found on their website. I would now like to turn the conference over to Mr. Neil Woodier, Chief Executive Officer. Please go ahead. Thank you, operator, and welcome to our Q1 twenty twenty six Earnings Call. Joining me today are Doug, Oliver, Cam, Dustin, Corne and Alejandra. But before we begin, please note the disclaimer on Slide two. Moving to Slide three, Aris Mining delivered a solid start to 2026, supported by higher production, a stronger realized gold price and continued progress across our growth portfolio.

1:40 Gold production totaled 74,000 ounces, gold revenue of $364,000,000 up 20% from Q4, adjusted EBITDA of $212,000,000 up 25% and adjusted net earnings of $124,000,000 or $0.60 per share, up from $0.46 per share in Q4. Our operations generated cash flow that funded our growth and expansion projects during the quarter, while generating $42,000,000 of free cash flow. Looking across our portfolio, we continue to advance each of our four assets. At Segovia, the ramp up of the expanded mill is progressing well.

2:29 Focus remains on increasing owner mining rates and developing our CMP business to support the new 3,000 tonne per day processing facility. At Mamato, construction of the new 5,000 tonne per day CIP plant remains on schedule for first gold production in Q4 of this year. In April, we connected the decline to the crosscut making an important milestone and providing direct underground access between the mining the bulk mining zone and the new CIP plant infrastructure. Toro Peru, the pre feasibility study is progressing well and remains on schedule for completion in the second half of twenty twenty six, so we can make a construction decision in early twenty seven.

3:19 Updated mineral resource and reserve estimates are advancing to support the mine schedule optimizations. Select pre construction activities continued during the quarter, including construction of the bridge and the Prunai River crossing, key personnel ramp up, camp expansion and ongoing roadworks. At Sotenorte, the environmental license application is nearing completion and it's on track for submission in the second quarter. And we continue to actively engage with the Colombian regulators to support a collaborative approach to the submission and review process. With our producing assets delivering strong results and our growth projects continuing to advance, Aris Mining is well positioned to achieve its longer term objective of approximately 1,000,000 ounces of annual gold production from assets we currently own.

4:15 And with that, I'd like to hand over to Cam to review our financial performance. Thanks, Neil. Turning to Slide four. The key message from the financial results this quarter is the continued strengthening of our business. We're seeing the benefit of higher production volumes, strong realized gold prices and disciplined cost management flowing through the income statement and into the balance sheet. The charts on this slide show the following progression over the past five quarters. Gold ounces sold, revenue, adjusted EBITDA and adjusted earnings per share have all moved meaningfully higher and importantly, the improvement has been consistent across our financial metrics. Please turn to Slide five for a discussion of the key cash flow drivers. We ended the first quarter with a cash balance of $472,000,000 up $80,000,000 from the $392,000,000 at the end of twenty twenty five, reflecting $103,000,000 of operating free cash flow after sustaining capital and taxes paid, which despite an additional $44,000,000 from increased cash mine operating earnings was $22,000,000 lower than it was in Q4 due to working capital movements and share based incentive settlements.

5:25 The $61,000,000 invested in growth and expansion capital comprised mainly of the $47,000,000 spent at Marmato as well as a $40,000,000 installment received under Marmato's precious metal stream following the achievement of the 50% construction capital expenditures milestone. In Q1 twenty twenty six, just as in full year 2025, we generated free cash flow while investing significantly in organic growth, which contributed to the steady growth of our cash balance over the year. The only exception being the temporary decline of our cash balance in Q4 of last year, which reflected the $60,000,000 cash consideration paid for our acquisition of the remaining 49% interest in So to Norte. It's also notable that our net debt was reduced to $1,600,000 down from the $86,000,000 at year end due to our increasing cash balance.

6:15 I'd like to now hand the call over to Dustin to discuss our operational results. Thank you, Cam. Turning to Slide six. Aris Mining reported consolidated gold production of 74,300 ounces in the first quarter, a 6% increase over Q4 twenty five, to which Segovia contributed 66,600 ounces and Marmato 7,800 ounces. Worth highlighting are the strong gold grades delivered at both of our operations. At Segovia, our mill feed in Q1 had an average gold grade of 12.41 grams per ton, significantly above reserve grade of 10.7. At Marmato, the first quarter mill feed grade was 3.53, also above reserve grade of 3.16 grams per ton.

7:06 At Segovia, our AISC margin increased to $2,935 per ounce, up 128% from Q1 twenty twenty five and up 25% from Q4 twenty twenty five, reflecting higher realized gold prices and increased gold sales volumes. That translated to an ARISC margin of CAD199 million, up 31% from Q4 twenty twenty five. Owner operated mining comprised 64% of the mill feed with an AISC of $14.92 dollars per ounce, down from $16.62 dollars per ounce last quarter and outperforming the full year 2026 guidance range of 1,700 to $1,800 per ounce. This improvement was primarily driven by higher gold ounces sold on stronger average gold grades.

7:54 Our CMP business generated an ARISI sales margin of 40%, achieving the top end of the full year 2026 guidance range of 35% to 40%. Turning to the chart on the bottom right, we highlight the continued expansion in margins at Segovia driven by the rising realized gold prices and disciplined cost controls. In Q1 twenty twenty six, the AISC margin continued to widen compared to previous quarters. Looking ahead, with our production profile being weighted towards the second half of the year in a supportive gold price environment, we're well positioned to keep generating strong cash flow to fund our growth. Moving to Slide seven. As discussed previously, we installed the second ball mill at Segovia in June of last year, which increased our processing capacity by 50% up to 3,000 tonnes per day.

8:47 In order to run our expanded processing plant consistently at 3,000 tonnes a day, we need to increase both our owner mining rates and our CMP mill feed. To facilitate the former, we're enhancing haulage capacity by way of building an interconnected underground haulage circuit, which will connect three of our four principal underground mines at Segovia, being El Silencio, Providencia and Sandra Cah. And we're driving new ramps to surface in both our El Silencio and Providencia mines. In addition to increasing the mill feed, these development projects have a few other positive attributes, such as enhanced productivity by enabling more efficient transport of workers, ore and waste, shortened cycle times eliminating long routes and multiple shafts, and we also eliminate a lot of our haulage through the main town of Marmato.

9:41 We expect to deliver the El Silencio ramp in Q4 twenty six, the connection between El Silencio and Sandra Ka in Q1 twenty seven, and the Providencia ramp in connection to El Silencio in Q1 twenty eight, enabling steady state production from next year onwards. With that, I'd like to pass over to Kourne for an update on the construction progress at Marmato. Thank you, Dustin. Moving to Slide 8. At Marmato, construction of the CIP plant and development in the bulk mining zone continues to advance with significant progress both underground and on surface. Last month, we achieved an important milestone as the new underground decline broke through into the Los Indios crosscut.

10:28 This connection enabled direct access from the bulk mining zone into the new 5,000 tonnes per day CIP plant. It also establishes an additional access and ventilation pathway facilitating ore and waste haulage between existing and new infrastructure and supporting the initial ramp up of mine production. Construction of underground workshops, main pump station and field offices will begin in Q2 twenty twenty six. Development of the main decline to the bulk mining zone is over 1,200 meters advanced, which equates to a completion rate of more than 70%. Moving to Slide 9. On surface, bulk earthworks for the process plant platform have been completed, along with key foundations for the mills, tailings thickener and the leach and CIP tanks.

11:25 Civil, mechanical and electrical works are continuing to advance well. In terms of equipment, all long lead items required for first gold have been ordered. Major equipment including the primary crusher, SAG and ball mill and filter presses are ready to be moved from storage in Cartagena and Medellin to our Marmada construction site, with deliveries beginning this month. In Q1, we entered into a leasing agreement with Sandvik, ordering an underground mining and development fleet. Equipment deliveries are scheduled to commence in Q3. Construction activities are progressing as planned, and we remain on schedule for first gold in Q4 twenty twenty six.

12:14 We expect a progressive stage production ramp up to steady state operations during 2027. Turning to slide 10. As you will see in the photos of this slide, work is continuing around the clock, underscoring both the pace and scale of development underway. Approximately eight fifty people work on-site during the day and two fifty people are on night shift, focused on work streams we deem safe at night. Last month, the project team achieved three sixty five days lost time injury free and I would like to thank everyone involved for their continued commitment to safely advancing the project. A new video showing the progress of the project is also available on our website.

13:02 The link is available at the bottom of the slide. With that, I'd like to pass it over to Neil for his closing remarks. Turning to Slide 11. Building on our strong first quarter performance, we remain firmly committed on track to deliver our full year 2026 guidance of 300,000 to 350,000 ounces. Looking ahead, our focus remains on advancing all four core assets, ramping up Segovia throughout the year, targeting gold production of two and sixty five thousand to 300,000 ounces for the year achieving the first pour for Mamato CIP plant in Q4, followed by a progressive ramp up during 2027 publishing the PFS for Toro Peru in the second half of the year as well as conducting additional work for enabling construction readiness and a construction decision for early twenty twenty seven submitting the environmental license application for So to Norte in Q2.

14:07 With our producing assets delivering strong results, our financial position and our growth projects continue to advance. Aris Mining is well positioned to achieve its longer term objectives of approximately 1,000,000 ounces of annual gold production from the assets we currently own. Thank you for joining us today. Operator, and please open the line for questions. Certainly. Our first question is from Carey MacRury with Canaccord Genuity. Please go ahead.

14:55 Hi, good morning guys and congrats on strong results. Maybe first on Segovia, just wondering if you can give us some more color on the developments, Just given that some of these ramps won't be done until you're showing 2028. When do we should we expect you to hit the 3,000 tonnes a day? And is that going to happen sort of you know, continuously over the next four or five quarters? Or is there stuff options? Just some more color on how we should think about the ramp up of underground mines tons. Hi, Carrie. I'll I'll take that one. So, yeah. Obviously, some of the development extends into 2028 being mainly in Providencia. But our biggest production area, as you know, your visit is Silencio, and all of that development is coming to completion at the end of this year. So our expectation is to hit the 3,000 ton a day mark towards the end of this year, early twenty twenty seven, and maintain it.

15:55 Providencia coming online through the the ramp and the access just makes it that much easier for our logistics. But really, it's the Silencio and Sandroquet connections that really open up our 3,000 ton a day production. Okay, great. And should we see a pickup in Q2 or is it more of an H2 pickup? No, it's more towards the second half. It will be probably late Q3, Q4 where we really start to see it again, all that development just having to get completed and open these additional areas and debottleneck our Silencio mine. Okay. And then just on the grade at Segovia obviously was high grade this quarter twelve point four grams per ton. Was that just positive grade reconciliation?

16:42 Should we expect that to continue into Q2 or just some guidance on grade would be helpful? No. Our grade guidance still remains within the nine to 10 grams per tonne. We got lucky in our one of our newer veins, we kind of hit a high grade pocket. And we really wanted to push and get that out given some of the logistical challenges. And we basically focused on that through Q1 to mine that area out and get it up into our mill. Okay, great. Maybe just one last one. I mean, cash balance continues to increase or generating free cash flow. On my numbers, it looks like that's set to continue at these prices. Are you guys thinking about share buybacks or anything like that at this point in time or just how you're thinking about the balance sheet?

17:31 No, I think when you look at our cash balance, you look at the fact that Gobi is generating a lot of cash, understand the point you're raising. But on the other hand, we are doing the expansion of the two mines at the moment and we have two more projects in the pipeline that certainly one we would hope to start constructing next year. So we have a long term cash requirement as we expand the business. Ultimately, when we're generating cash without expansion, of course, we'll turn to a dividend. Okay, great. That's it for me. Thanks. There appear to be no further questions. I'd like to turn the conference back over to Mr. Woodyer for closing remarks.

18:19 Thank you, operator. Thank you everybody for taking the time to come listen to the presentation. We're very happy with the results and believe me, we will continue to perform in the future as we have in the past. Thank you very much everybody. This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.