Aris Gold Takes A 20% Stake In Soto Norte Gold Project For $100 Million

Aris Gold (TSX: ARIS) is set to become the operator of another mine in Colombia. The firm this morning revealed it has entered into an arrangement to acquire a 20% stake in the Soto Norte project, which it will become the operator of once mining gets underway.

Presently the project is deemed to be in the feasibility stage of development, with the current resource estimate hosting indicated resources of 8.5 million ounces of gold and inferred resources of 3.6 million ounces of gold. The property also features 55.3 million ounces of silver and 193 million pounds of copper on an indicated basis, and a further 22.8 million ounces of silver and 107 million pounds of copper on an inferred basis.

The project is slated to feature an underground mine, with a total of 450,000 ounces of gold to be produced on an annual basis, with a 14 year mine life. All in sustaining costs of production are estimated at $471 per ounce, with the project expected to cost an initial $1.2 billion in initial capital cost while featuring an after-tax NPV with a 5% discount of $1.5 billion at $1,675 gold.

The arrangement will see the company take an initial 20% interest in the project, with the option to acquire a further 30% stake. The project as a result is set to be a joint venture with MDC Industry Holding Company, whom is referred to as Mubadala. To acquire the stake, Aris will pay $100 million in cash, with $50 million to be paid upon closing, and $50 million to be paid within 12 months.

The option, if executed, will see Aris pay $300 million for the additional 30% stake. The option is valid until the earlier of ten weeks following ESIA approval (which is expected to take two years), or 42 months after closing. A 7.35% gold and 100% silver precious metal stream is also to be taken out on the property by Mubadala as part of the agreement, however this is only applicable after the first 5.7 million ounces of gold has been produced.

To pay for the stake, Aris has upped a previous precious metals stream at its Marmato project with Wheaton Precious Metals. The stream has increased from $110 million to $175 million, with $15 million to be paid upon closing and a further 50% to be paid during construction of the lower mine. The firm as a result will purchase 10.5% of gold and 100% of silver production at the Marmato mine until 310,00 ounces and 2.15 million ounces have been delivered, respectively. The company has also issued a $35.0 million convertible senior unsecured debenture to GCM Mining that is valid for 18 months at and bears interest at 7.5% per annum.

Construction of the Soto Norte mine is expected to begin as soon as the expansion at the Marmato project is completed.

Aris Gold last traded at $1.50 on the TSX.

Information for this briefing was found via Sedar and Aris Gold. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply