Aris Mining Corporation (ARIS) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Aris Mining Second Quarter 2026 Results Conference Call. We will begin with an overview from management followed by a question-and-answer period. [Operator Instructions] The conference is being recorded. [Operator Instructions] 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 Aris Mining's website at aris-mining.com. Second quarter 2026 financial reports for Aris Mining have been filed on SEDAR+ and EDGAR and can also be found on their website. I would now like to turn the conference over to Mr. Neil Woodyer, Chair and Chief Executive Officer. Please go ahead.

Thank you, operator, and welcome to our Q2 2026 earnings call. Today, joining me are Doug, Oliver, Cam, Dustin, Corne and Alejandro. But before we begin, please note the disclaimer on Slide 2. Moving to Slide 3. The headline for the quarter is straightforward. We delivered a strong first half year and remain firmly on track for our full year guidance. The Q2 numbers I'd like to highlight include 74,000 ounces of gold production, $179 million of adjusted EBITDA and a quarter end cash balance of $426 million. More important than any quarterly number is what these results allowed us to do. In the first half year, our operating cash flow after taxes was $200 million, which funded our capital expenditures of $196 million, allowing us to maintain a strong cash position. Our financial strength enables us to advance the execution of our growth strategy across all 4 of our assets. At Segovia, the expanded mill is performing well. Our focus has shifted underground, where we're adding the haulage capacity and mining flexibility needed to keep plant consistently full. We expect that work to translate into higher production in the second half and a full run rate capacity for next year. At Marmato, the project focus is moving from major construction towards start-up readiness. The bulk zone is now connected directly to the new plant area and the SAG and ball mills are on site and mechanical installation is underway. First gold remains on schedule for the fourth quarter of this year. At Toroparu, the pre-feasibility study remains on schedule for completion in the second half of this year, supporting a construction decision targeted for early 2027. At Soto Norte, the environmental studies will be ready for submission. So the story for the past half year is one of execution, strong performance from the producing assets, visible progress on the growth projects and a clear path to our 2026 production guidance of 300,000 to 350,000 ounces. With that, I'll pass to Cam to review our financial performance.

Thanks, Neil. Turning to Slide 4. Starting with our cash position, we started Q2 with $472 million of cash and ended at $426 million. The cash movement here mainly reflects the timing of our annual Colombian tax payments and the significant capital we put into Marmato and Segovia this quarter as detailed on the slide. But the bigger picture is really the funding story. Over the first half of the year, our after-tax operating cash flow essentially covered our entire capital program. We stayed free cash flow positive even as we push forward on multiple major growth initiatives at once. And despite ramping up investment meaningfully in Q2, we ended the quarter with a cash balance above where we finished in 2025. Turning to Slide 5. These charts really tell the story of our operating momentum behind that financial strength. Since we expanded Segovia's processing capacity back in 2025, we've seen a clear step change in production. First half gold sales were up 27% year-over-year. And on a trailing 12-month basis, we're now approaching 300,000 ounces. Combine that higher volume with stronger gold prices and you get record first half revenue, adjusted EBITDA and earnings. What these charts really show is that our operating growth is translating directly into cash generation and profitability. With that, I'll hand it over to Dustin to walk through the operations.

Thanks, Cam. Turning to Slide 6. Our operations generated consolidated gold production of 74,000 ounces in the second quarter and 148,000 ounces for the first half of 2026. Segovia remains our main production contributor, while Marmato's production impact is beginning to increase as activity in the bulk mine zone builds. At Segovia, the operating picture remains strong. Year-to-date owner mining AISC at $1,623 an ounce are below our full year guidance range, even as we increase investment in underground development to support increased mining rates. Our contract mining partners, CMPs, are also performing well with our year-to-date sales margin of 43%, above the top end of guidance. Together, the owner-mined and CMP supplied ounces continue to generate very strong all-in sustaining margins, $157 million in Q2 and $356 million for the first half of the year. The chart on the lower right makes that point clearly. Even with the gold price dipping from the first quarter's record level, Segovia's economics remain very strong and well ahead of last year. Moving to Slide 7. The important message here is that the production profile is progressing as planned. In the first half of the year, consolidated production totaled 148,000 ounces, close to 50% of the full year guidance midpoint. We entered the year expecting a stronger second half driven by 2 very specific factors. First, at Segovia, the production ramp-up continues to progress. Ongoing underground development is increasing mining and haulage capacity, which is expected to provide additional mill feed and support higher production in the second half. Second, at Marmato, the existing flotation plant can support the low end of the annual guidance range on its own. The ramp-up of the bulk mining zone has allowed us to fill the existing mill, while commissioning of the new CIP plant in the fourth quarter creates the opportunity to move higher within that range, and, more importantly, sets up a much larger contribution in 2027. These two drivers support our confidence in the 2026 guidance range and position the company for another meaningful step-up in production next year. Turning to Slide 8. Here, we outline our plan to unlock Segovia's full potential. The expanded processing plant is no longer the constraint. The task is now to increase the rate at which we can develop, mine and move ore underground. To achieve this, we have increased capital investments at Segovia to $48 million in H1, which includes both sustaining and nonsustaining capital. We are developing new ramps at El Silencio and Providencia and building a main haulage circuit that connects El Silencio, Providencia and Sandra K. This will improve the movement of people, equipment and ore across the complex. At the same time, we are renewing and expanding the mobile fleet, including new bolters, jumbos, trucks and loaders. These are practical investments aimed at shortening cycle times and giving the mine more flexibility. Together, these investments are expected to increase mill feed, improve haulage efficiency and reduce traffic through town. They are important enablers of higher production in the second half of 2026 and beyond. With that, I'd like to pass it over to Corne for an update on Marmato.

Moving to Slide 9. At Marmato, the project is increasingly shifting from construction progress to operational readiness. Completing the Los Indios cross-cut in April was a major milestone. It created direct underground access between the bulk mining zone and the new plant, improving ventilation and haulage and allowing us to prepare stopes and build the initial ore stockpile for commissioning. Mining capacity in the bulk mining zone has increased and is already contributing to production growth through the existing flotation plant. New mining equipment will begin arriving in the third quarter, and the main decline is now more than 85% complete. Put simply, the mine is getting ready to feed the new plant. The remaining capital requirements and funding sources are set out on the slide. So far this year, we invested approximately $120 million in growth capital expenditures at Marmato. We now estimate the remaining $118 million will be required through year-end to complete commissioning and achieve first gold. Additional expenditures are related to project improvements across various areas of the mine infrastructure. Some of the additional expenditures are also being incurred to ensure operational readiness, including building a mill feed stockpile and the timely delivery of critical path equipment. We expect a total investment of approximately $238 million this year compared with the $220 million budget we established at the start of the year. In terms of project funding, we expect to receive the final $42 million of Wheaton installment in Q3. Of the $180 million of estimated cost to complete required for commissioning and achieving first gold, our net funding requirement is approximately $76 million. That portion is going to get funded from cash on hand and operating cash flow. In summary, the mine is ready. The mill construction and commissioning remain on schedule, and we continue to expect first gold in the fourth quarter, followed by a staged ramp-up into 2027. Moving to Slide 10. The photos give a good sense of the pace and scale of activity on site. We now have almost 1,600 construction personnel working across day and night shifts, with more than 4 million work hours invested in the project. I am particularly proud that the construction team has gone 457 days without a lost time injury. Since our last update, the SAG and ball mills have arrived and mechanical installation has begun. The crusher area is moving into mechanical installation. The leach tanks and CIP circuit are progressing well. The tailings thickener is mechanically assembled and the main substation installation is advancing according to schedule. There is still work ahead, but the project is visibly coming together. An up-to-date construction video is available on our website. The link is available at the bottom of this slide. Moving to Slide 11. Beyond the producing assets, Soto Norte and Toroparu are moving toward their major -- next major milestones. At Toroparu, the pre-feasibility study remains on track for completion, engineering and optimization work is progressing, while preconstruction activities is already visible on site through the Puruni bridge, camp expansion, road improvements and other infrastructure. Our Guyana team has grown to 100 people, and we continue to target a construction decision in early 2027. With that, I'd like to pass it over to Neil for his closing remarks.

Turning to Slide 12. Let me close by bringing the pieces together. We entered 2026 with a clear plan, deliver from our producing operations, complete the build of Marmato and continue advancing our 2 new mine growth projects. At the halfway point, that plan remains on track. We continue to expect to achieve our full year's production guidance. At Segovia, we're starting to fill the processing capacity, which we have already installed. At Marmato, the new CIP plant remains on schedule for first gold followed by a staged ramp-up through 2027. Together, Segovia and Marmato provide a clear path forward to approximately 500,000 ounces of annual gold production in the near term. Beyond that, Toroparu and Soto Norte provide the next leg of growth. So as I look forward, we have a strong operating base, a strong balance sheet and a clear sequence of achievable milestones in front of us. And I'd like to thank you for joining us today. And, operator, could you please open the line for questions.

The first question comes from Carey MacRury with Canaccord.

On a strong quarter. Maybe first for Dustin. Just wondering if you can give us some more color on the Segovia ramp-up. I know tonnage was up this quarter. I know you're working on the Silencio, the new ramp there. Is that what's needed to take throughput up? Or should we expect throughput to rise through Q3 and Q4?

Carey, good to hear from you. No, exactly as we discussed, I mean, our guidance is more heavily weighted to the second half as these ramps and all our additional development comes online, opens up additional ore faces and our El Silencio ramp to surface breaks through in Q4. So as you can see, our weighting goes more towards Q3 and probably later Q3 and into Q4, where we'll start to see production continually ramp up towards the end of the year into 2027.