Aris Mining Corporation (ARMN) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals strong financial performance with record high net adjusted earnings and gold revenue, coupled with promising future production guidance. The company is on track with strategic expansions, despite some development challenges. The Q&A indicates confidence in meeting production targets, although some uncertainties remain. Overall, the positive financial metrics and optimistic guidance suggest a likely positive stock price movement.

Key Financial Performance

Net Adjusted Earnings $48 million or $0.27 a share, the highest quarter since the formation of Aris Mining in September 2022.

Gold Revenue $200 million, up 30% over Q1, driven by strong production and higher realized gold prices.

Trailing 12 Months Adjusted EBITDA $264 million, reflecting strong operational performance.

Cash Position $310 million, including $54 million from warrants exercised in the quarter. Subsequent to June 30, an additional $61 million was received from exercised warrants, totaling $150 million in cash proceeds.

Free Cash Flow from Operations $38 million, after investing $37 million in expansion projects and paying 2024 taxes.

Taxes Paid $42 million in Q2, up $37 million from Q1, primarily due to the timing of annual 2024 Colombian income tax settlements.

Financing Activities Cash Inflow $32 million, mainly from $53 million in proceeds from warrant exercises.

Gold Production 58,700 ounces in Q2, a 7% increase from Q1 2025. First half of 2025 production was 130,000 ounces, a 13% increase compared to the first half of 2024.

All-in Sustaining Cost (AISC) Margin Increased by 43% compared to Q1, driven by strong production, higher realized gold prices, and solid cost controls.

Owner Mining AISC $1,520 per ounce in Q2 and $1,503 per ounce for the first half of the year, trending towards the lower end of the company's full-year 2025 guidance of $1,450 to $1,600 per ounce.

Contract Mining Partners AISC Margin 42% in Q2 and 41% in the first half of the year, above the top end of the company's full-year 2025 guidance range of 35% to 40%.

Leverage Ratios Total leverage decreased by 1.2 turns and net leverage by 0.8 turns since Q4 2024, with total leverage at 1.8x and net leverage at 0.7x as of June 30, 2025.

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Operating Highlights

Second ball mill at Segovia: Completed installation and commissioning, increasing processing capacity by 50%. Targeting 300,000 ounces of gold production in 2026.

Marmato bulk mining zone: Construction progressing with earthworks for substation and CIP platforms nearing completion. Equipment deliveries underway. First ore processing and production ramp-up expected in the second half of 2026.

Soto Norte project: Pre-feasibility study underway, expected completion in Q3 2025. Smaller scale development plan includes processing options for local small-scale miners.

Toroparu project: Preliminary economic assessment in progress, expected completion in Q3 2025. Evaluating updated development options in the current gold price environment.

Gold revenue: Q2 gold revenue totaled $200 million, up 30% over Q1.

Gold production: Q2 production of 58,700 ounces, a 7% increase from Q1. Targeting over 500,000 ounces annually in the long term.

Artisanal and small-scale miners in Marmato: Signed MOU with Colombian government and stakeholders to formalize artisanal and small-scale miners, promoting environmental stewardship and safety standards.

Cash position: Ended Q2 with $310 million in cash, including $150 million from exercised warrants.

All-in sustaining cost margin: Increased by 43% compared to Q1, supported by strong production, higher gold prices, and cost controls.

Leverage: Total leverage decreased by 1.2 turns and net leverage by 0.8 turns since Q4 2024.

Formalization of artisanal miners: MOU signed to integrate artisanal miners into formal operations, aligning with sustainable development goals.

Growth strategy: Focused on increasing annual gold production to over 500,000 ounces and advancing key projects for long-term growth.

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Risk or Challenges

Marmato decline development challenges: The decline development at Marmato faced poor ground conditions and a large ingress of water, slowing down progress. This could potentially impact timelines and increase costs if not managed effectively.

Warrant-related earnings volatility: The warrants introduced significant noncash earnings volatility due to mark-to-market revaluations, which affected financial results. Although this issue has been resolved with the expiration of the warrants, it previously created financial reporting challenges.

Regulatory and environmental licensing for Soto Norte: The Soto Norte project requires the completion of a pre-feasibility study and subsequent environmental licensing. Delays or challenges in obtaining these approvals could impact project timelines and development.

Artisanal and small-scale mining formalization: The formalization of artisanal and small-scale miners at Marmato involves commitments to streamline permitting, promote environmental stewardship, and provide technical training. This initiative, while beneficial, could face implementation challenges and require significant resources.

Economic and gold price dependency: The company's financial performance and growth plans are heavily reliant on a favorable gold price environment. Any significant downturn in gold prices could adversely affect revenues and project viability.

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Guidance & Outlook

Segovia Production Target: Production is expected to ramp up in the second half of 2025, targeting 300,000 ounces in 2026.

Marmato Bulk Mining Zone: Construction is advancing with first ore processing and production ramp-up expected in the second half of 2026. The complex has the potential to produce over 200,000 ounces of gold annually once completed.

Soto Norte Project: Pre-feasibility study is underway with completion expected in Q3 2025. The study includes a smaller scale development plan and processing options for local small-scale miners. Environmental license application to follow.

Toroparu Project: A new preliminary economic assessment is in progress, with completion expected in Q3 2025, to evaluate updated development options in the current gold price environment.

2025 Production Guidance: Gold production for 2025 is expected to be weighted in the second half of the year, supported by increased milling capacity and production ramp-up at Segovia.

Gold Production Growth: The company aims to more than double annual production to over 500,000 ounces in the coming years.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you provide more details on Segovia's performance in the second half, given the 100,000 ounces produced in the first half and the guidance of 210,000 to 250,000 ounces?

A:The company is doing a lot of development, opening new stoping areas, and gaining access to the surface. This should place them well within the guidance range, with a modest increase expected in Q3 and a bigger increase in Q4.

Q:Why is the performance of Contract Mining Partners trending above guidance? Are there factors driving this, or is it due to conservative guidance?

A:The performance is linked to the gold price, which is hard to predict. Margins fluctuate with the gold price as payments are on a sliding scale based on grade and gold price. The guidance is considered a good estimate for the year-end.

Q:What should we expect for capital spending in the second half for Marmato's expansion?

A:The estimate to completion remains at $283 million, but the specific amount for the second half of the year was not provided and requires further calculation.

Q:Review of Unclear Management Responses

A:Management avoided providing a specific figure for capital spending in the second half for Marmato's expansion, stating they would need to calculate and provide the information later.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

ARMN Transcript

Aris Mining Corporation (ARMN) Q2 2025 Earnings Call Transcript

Positive8-8

Aris Mining Corporation (AMEX:ARMN) Q1 2025 Earnings Call Transcript

Positive5-14

The earnings call reveals strong financial performance with record EPS and revenue growth. The company is on track with expansion projects, and guidance suggests significant production increases. While there are risks such as regulatory issues and cost overruns, the positive financial metrics and strategic plans outweigh these concerns. The Q&A section did not reveal major negative sentiment from analysts. The sentiment rating is adjusted to 'Positive' due to the strong earnings, optimistic guidance, and potential for increased cash inflow from warrant exercises.

Aris Mining Corporation (AMEX:ARMN) Q4 2024 Earnings Call Transcript

Positive3-14

The earnings call indicates strong financial performance with increased revenue, net income, and cash position. Despite some operational and financial risks, the company is on track with its expansion projects. The positive financial results, along with optimistic production guidance, outweigh the concerns. The Q&A section did not reveal significant negative sentiment, and the company's strategic initiatives suggest a positive outlook for the stock over the next two weeks.

Aris Mining Corporation (ARMN) Q4 2024 Earnings Call Transcript

Positive3-13

The earnings call reflects strong financial performance with a significant increase in net income, EBITDA, and gold revenue. Despite the absence of specific guidance for next year's capital expenditure, the company's expansion plans and strong cash position are positive indicators. The anticipated AISC margin and production targets for 2025 further support a positive outlook. While risks like competitive pressures and supply chain challenges exist, the overall sentiment leans positive due to strong earnings, optimistic guidance, and robust financial health.

ARMN Report

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