Vancouver-based Aris Gold Corp. (ARIS:TSX; ALLXF:OTCQX), today announced that "it has entered into a definitive agreement with MDC Industry Holding Company LLC (Mubadala), a wholly owned subsidiary of the Abu Dhabi based investment company Mubadala Investment Company PJSC, whereby Aris Gold will acquire a 20% joint venture interest in the Soto Norte gold project in Colombia, with the option to acquire a further 30% interest."
The firm stated that Soto Norte is a large property that offers high-grade mineral reserves with district-scale potential. Aris Gold claimed that it has also taken additional steps to strengthen its financial position by $100 million. The company advised that is has leveraged its existing precious metals stream at the Marmato Mine by $65 million and is making arrangements to secure a $35 million convertible debenture.
The company's Chair Ian Telfer commented, "Acquiring interests in large-scale deposits with low technical risk is the right move for Aris Gold. This is how successful gold mining companies are built, and I'm pleased to see Aris Gold is delivering on this responsible growth strategy."
Aris Gold's CEO Neil Woodyer added, "Aris Gold will build a successful operation using state-of-the-art technology that will provide long-lasting benefits to the local communities and significant social development opportunities for the region. Soto Norte dramatically increases our growth profile with its potential to produce over 450 Koz Au per year. Construction of Soto Norte is expected to follow the expansion of our 100%-owned Marmato gold mine."
Industrials at Mubadala Executive Director and Minesa Chairman Danny Dweik stated, "We are delighted to bring in Aris Gold as our operating partner in Minesa. The Soto Norte project will benefit from their technical capabilities and Colombian experience, and we look forward to working with them and the local communities on bringing this world-class project to fruition."
"The team at Aris Gold has extensive local market experience and a long track record of successfully executing complex Colombian projects. We believe they are well-positioned to support Minesa in becoming a leading gold mining company in Colombia, " remarked Mohamed Mirza, Minesa CEO and Director at Industrials at Mubadala.
The company explained that the Soto Norte underground gold project hosts an Indicated resource containing 8.5 Moz Au, 55.3 Moz Ag and 193 Mlb Cu and an Inferred resource of 3.6 Moz Au, 22.8 Moz Ag and 107 Mlb Cu.
The underground operation at Soto Norte has the capacity to process 2.6 Mt of material yearly. The project's Feasibility Study (FS) estimates initial total capital costs of $1.2 billion with average production of 450 Koz Au per year. The Study calls for a 14-year mine life with average all in sustaining costs (AISC) of $471/oz Au. The FS estimates that utilizing a net present value (NPV) of 5%, the property has an after-tax value of $1.5 billion and an internal rate of return (IRR) of 20.8% based upon a $1,675/oz gold price. If the average gold price were to increase to $1,925/oz, then the projects after-tax project NPV would rise to $2.0 billion, and the IRR would be 24.4%.
The company stated that Soto Norte offers district-scale potential due to successes achieved in neighboring areas by other companies. The firm indicated that the Soto Norte project is on a path to produce 400 Koz/year in addition to the production from its Marmato mine that has capacity to deliver 175 Koz Au per year.
Aris Gold advised that it is entering into a comprehensive joint venture agreement with Mubadala to advance, build, manage and operate the Soto Norte project. Under the terms of the agreement, Aris is to pay Mubadala $100 million in cash ($50 million at closing plus $50 million within 12 months) in exchange for a 20% interest in the joint venture company and Minesa.
The company stated that the transaction is expected to close in in April 2022, subject to completion of ordinary closing conditions. In addition, Aris Gold at its discretion has the option to acquire an additional 30% interest in the joint venture company and Minesa for an additional payment of $300 million in cash subject to regulatory approvals by mining agencies.
As part of the agreement between the two firms, "Mubadala is retaining a precious metals streaming interest on 7.35% of payable gold and 100% of payable silver." The report noted that the streaming royalties will only apply to incremental production after the first 5.7 Moz Au gold has been produced.
Aris Gold advised that in order to finance its new JV at Soto Norte, "it has amended its current $110 million precious metals stream at the Marmato mine with Wheaton Precious Metals International (WPMI) to increase the aggregate total funding amount to $175 million, with additional payments to Aris Gold of (i) $15 million upon closing of the Transaction and (ii) $50 million payable during the construction and development of the new Lower Mine."
The company mentioned that it also has made arrangements to issue a $35 million convertible senior unsecured debenture to GCM Mining Corp. (GCM:TSX) due 18 months from closing of the transaction.
Aris Gold is a mining company headquartered in Vancouver, B.C. In addition to its new JV at Soto Norte, the company operates the Marmato mine in Colombia and the advanced exploration stage Juby gold project located within the Abitibi Greenstone Belt in Ontario, Canada.
Aris Gold started the day with a market cap of around $206.7 million with approximately 137.8 million shares outstanding. ALLXF shares opened 23% higher today at $1.4698 (+$0.2781, +23.34%) over Friday's $1.1917 closing price. The stock has traded today between $1.446 and $1.732 per share and closed for trading at $1.5479 (+$0.3572, +30.00%).
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