Summary
- The company reported its fourth-quarter 2022 production results and provided 2023 guidance on January 23, 2023.
- Aris Mining's consolidated gold production for 2023 is expected to be between 230K Au Oz and 270K Au Oz oz, with an AISC of between $1,050 and $1,150 per ounce.
- I recommend buying TPRFF between $2.75 and $3 with lower support at $2.45.
Investment Thesis
1 - Presentation
The Canada-based Aris Mining Corporation (TPRFF) owns Segovia operations and the Marmato Mine in Colombia, the company's principal producing assets.
On September 28, 2022, GCM Mining Corp. (GCM Mining) (GCM:CA) (TPRFF) and Aris Gold Corporation (Aris Gold) (ARIS:CA) (ALLXF) completed their business combination .
The combined entity has been renamed Aris Mining Corporation and operates several high-grade underground mines at its Segovia Operations and the Marmato Mine, which together produced 230,000 ounces of gold in 2021. Aris Mining also owns two advanced development projects, the Marmato Lower Mine expansion and Toroparu Project, and is the operator and 20% shareholder of the Soto Norte joint venture, a large-scale underground project advancing its environmental permitting.
With the merger completed, Aris Mining is now a leading Latin American gold producer with two producing mines, a gold project in Colombia and a significant project in Guyana. The Segovia mine in Colombia is the flagship producing asset.
Note: After the merger was completed, the company reduced CapEx at the large gold project called Toroparu in Guyana to allow the company to validate the previous management team's plan of construction:
Aris Mining is now focused on a re-evaluation of the Toroparu Project, including a review to validate the previous management team's plan to construct the processing plant in two phases. During this period and until the development plan is fully defined, Aris Mining is reducing previously planned expenditures.
Important note: This article is an update of my article published on June 28, 2022. I have been following TPRFF on Seeking Alpha since January 2021.
2 - 4Q22 Production results snapshot and commentary
The company reported its fourth-quarter 2022 production results and provided 2023 guidance on January 23, 2023.
2.1 - 2022 Gold Production and Sales by Quarter
Operation | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Full-year2022* |
Segovia Operations | 49,864 | 53,077 | 54,630 | 52,592 | 210,163 |
Marmato Upper Mine | 7,419 | 7,411 | 5,176 | 5,210 | 25,216 |
Total Gold Production | 57,283 | 60,488 | 59,806 | 57,802 | 235,379 |
Total Gold Sales | 61,343 | 61,583 | 59,336 | 59,157 | 241,419 |
* Marmato Upper Mine production is presented on a full-year 2022 basis. The operation was acquired on September 26, 2022, and is included in the consolidated financial results of Aris Mining on a post-acquisition basis . |
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") of 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 |
Aris Mining CEO Neil Woodyer commenting on the fourth-quarter 2022 results:
Our Segovia Operations delivered full year production of 210,163 oz and met 2022 guidance of between 210,000 and 225,000 oz. Our Marmato Upper Mine produced 25,216 oz during 2022, while the site advanced the Marmato Lower Mine expansion project in parallel. Our significant achievements in 2022 also included strengthening and expanding our business with the merger of GCM Mining and Aris Gold and becoming the operator of the Soto Norte joint venture.
3 - Stock Performance
TPRFF has underperformed the VanEck Vectors Gold Miners ETF ( GDX ) and is down 15.5% on a one-year basis.
Aris Mining - Historical Snapshot until 3Q22 - The Raw Numbers
Note: The company released the preliminary production numbers for the fourth quarter of 2022.
Gran Colombia | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 |
Total Revenues In $ Million | 93.62 | 101.32 | 101.37 | 93.91 | - |
Net Income in $ Million | 6.61 | 5.24 | 38.97 | -48.35 | - |
EBITDA $ Million | 32.14 | 35.18 | 73.48 | -21.02 | - |
EPS diluted in $/share | 0.07 | 0.05 | 0.15 | -0.48 | - |
Operating Cash flow in $ Million | 27.41 | 24.21 | 31.53 | 8.28 | - |
Capital Expenditure in $ Million | 21.97 | 20.26 | 35.27 | 28.83 | - |
Free Cash Flow in $ Million | 5.44 | 3.95 | -3.75 | -20.55 | - |
Total Cash $ Million | 328.04 | 315.06 | 265.50 | 325.74 | - |
Total Long-term Debt (incl. current) In $ Million | 314.27 | 311.31 | 310.90 | 376.58 | - |
Shares outstanding -(diluted) in Million | 94.89 | 99.96 | 108.13 | 101.00 | - |
The dividend is paid per month now/ Quarterly dividend in $/share. | 0.034 | 0.034 | 0.034 | 0.034 | - |
Data Source: Company release. (More data available for subscribers only).
Production Analysis
1 - Production was 57,802 Au Oz in 4Q22 (including Marmato Mine)
1.1 - Gold and Silver production: Historical chart
(The company has not indicated silver production for 3Q22 and 4Q22.)
Note: Gold sold in 4Q22 was 57,802 Au Oz, including 5,210 Au Oz from Marmato mine.
In 2022, Gold production was 235,379 Au ounces, including the Marmato mine, and sold 241,419 Au ounces. However, gold production from the Marmato upper mine has been added to the four quarters of 2022, while the consolidated gold production only started on September 26, 2022. Final results are expected to be released in mid-March 2023.
Production from Segovia operations includes:
- Sandra K mine
- Providencia mine
- El Silencio mine
2 - Important projects: The Marmato Lower mine expansion, the Toroparu Project, and the Soto Norte Project
Aris Mining also owns two advanced development projects, the Marmato Lower Mine expansion, and Toroparu Project. Both projects are in an advanced stage. The Marmato lower mine expansion has an agreement with Wheaton Precious Metals International (WPMI).
As part of the Aris Mining Transaction, the Company acquired the deferred revenue associated with Aris Gold's precious metals purchase agreement (the "PMPA") with WPMI. Under the arrangement, WPMI will provide aggregate funding amount to $175 million, of which $53 million has been received, with the balance ($122 million) receivable during the construction and development of the Marmato Lower Mine.
Aris Mining is the operator and 20% shareholder of the Soto Norte joint venture. Also, Aris Mining is the operator of The Soto Norte Project, previously known as La Bodega and El Gigante. It is an advanced feasibility-stage underground gold project undergoing permitting.
The company intends to advance the Soto Norte Project environmental licensing process by submitting a new environmental assessment study to Autoridad Nacional de Licencias Ambientales (ANLA) by mid-2023 and complete the licensing process during 2024.
Technical analysis (short-term) and commentary
TPRFF forms an ascending channel pattern with resistance at $3.70 and support at $2.95.
Ascending channel patterns or rising channels are short-term bullish in that a stock moves higher within an ascending channel, but these patterns often form within longer-term downtrends as continuation patterns. The ascending channel pattern is often followed by lower prices, but only after a downside penetration of the lower trend line. The stock will continue channeling upward until it is able to break either the upper or lower trend line.
The trading strategy is to sell about 30% between $3.65 and $3.80 with higher resistance at $4 and accumulate between $2.75 and $3 with lower support at $2.45.
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 $4.50s or higher.
In a bearish case, TPRFF could cross the support and drop at or below $2.55.
Conversely, if the gold price turns even more bullish following the Fed's decision on interest rates, TPRFF can trade between $5 and $4.50 quickly.
Thus, 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.
For further details see:
Aris Mining: A Stronger Company In 2023