Aris increase Soto Norte stake

Aris Mining has agreed to acquire an additional 31% interest in the Soto Norte gold-copper project in Santander Colombia from the Abu Dhabi-based investment company Mubadala Investment Company and amend the joint venture agreement to bring its total interest to 51%.

Aris Mining will issue 15.75 million shares to Mubadala, a 9.9% ownership stake, with an additional 6 million shares to be issued upon receiving an environmental license for Soto Norte. The current market value of the 21.75 million shares to be issued to Mubadala is US$90 million, much less than the $300 million in cash stipulated in the original agreement.

"When we originally looked at the deal our focus was on the cost to get the initial 20%, and the balance was something for the future. I always felt we could negotiate that again when the time came. The idea of the scope of the project and the way we have played it has changed. We have become close with Mubadala, and they have confidence in what we are doing. The Aris name is now strong in the project area, and it is easier to show a clear path forward, so the risk profile is different. Mubadala also recognises that our shares are undervalued today," Aris Mining chief executive Neil Woodyer told Mining Journal.

Aris has completed optimisation studies for a smaller development at Soto Norte to reduce the environmental footprint, including the construction of a smaller processing plant with a longer operating life, adopting a flexible mining method to target higher-grade material earlier in the mine life, and installing a paste backfill plant to minimise surface tailings storage requirements. A prefeasibility study (PFS) has been initiated, which is expected to be completed by early 2025.

The January 2021 feasibility study was for a 7200tpd processing plant with an average production of over 450,000ozpa for 11 years from a 5moz reserve. The scaled-down concept will feature a 2750tpd plant, which will be the subject of the PFS. It will prioritise initial access to a higher-grade zone to sustain a mining rate approaching 2Mtpa of mill feed and waste and production of over 200,000ozpa.

"Under Ike [Batista, owner of former operator AUX], the idea was to make the project as big as possible. Mubadala picked up the project but didn't spend a great deal of time looking at it from a technical point of view. We looked at starting with a smaller mine to reduce construction, operating, and environmental risks and to make the mine plan more efficient," said Woodyer.

The mining method will change to long hole open stoping (LHOS) targeting higher grade stopes in the upper levels of the mine early in the mine life, utilising support pillars in the first stage of mining and paste backfill in the second stage when the support pillars will be extracted. This will also see the development of the paste fill plant deferred to reduce the upfront capital requirement. The operation will still produce a concentrate shipped via barge to the coast for onward transportation.

Aris also plans to use an aerial ropeway to move mill feed from the existing portal to the processing plant eliminating the need to build a 6.9km tunnel, accelerating construction timelines and reducing capital costs. The company said ropeway technology requires minimal land use, and is easily removed at the end of the mine life. This will also help reduce the construction time from 3.5 years established in the feasibility to around two years.

"Having a smaller output means the tailings are easier to manage. Some will be used for backfill and the tailings storage facility will be very much smaller," said Woodyer.

The smaller output also means the company can undertake the environmental permitting process with the regional authority rather than the national agency ANLA, as it will be under the 2Mtpa threshold.

Executives said during a conference call about the announcement that Aris will solely fund the PFS and environmental work, which the company estimates at about $20 million. Subsequent project construction costs will be funded on a pro-rata basis.

Aris aims to complete the PFS in 2025 and then move into the environmental licensing process with the regional environmental authority, which it estimates will take 18 months to complete, with a construction decision possible in early 2027.

During the conference call, Aris executives said that nearby communities are warming to the development of the project with a December 2023 community survey showing only a 10% disapproval rating and 24% positive rating compared with a 60% disapproval rating when the company obtained its option on the project. The survey included 1300 people of the 4000 people in the nearby communities.

Soto Norte is not in the Santurban paramo protected area, where mining is prohibited, although it is nearby. In recent years, the paramo has been degraded by the impacts of illegal gold mining and, more recently, fires earlier this year. "We are eager to do what we can to help the paramos. We are not in the paramo and there are traditional miners between us and it," said Woodyer.

The permitting challenge of Soto Norte may well lie in the hands of the residents of Bucaramanga, the major city in the region some 80km from the project. While not in the area of direct influence, concerns of Bucaramanga residents about water will likely play a role as they did more than a decade ago when Greystar Resources sought to permit its Angostura gold project, which is adjacent to Soto Norte.

Woodyer said the company has also been progressing in building relations in Bucaramanga. "We will procure a lot of services and supplies from the Bucaramanga area, and people there now have a much better understanding of the contribution to the economy we will be making due to the outreach we have been doing," he said.

With water management a key issue in the area and downstream in Bucaramanga, the Soto Norte project is likely to contribute to solving the environmental liabilities generated by traditional and illegal mining in the region. The company estimates there are 600 miners in the region, and it has initiated formalisation processes with 160.

Segovia

Elsewhere in Colombia, Aris is progressing with a plant debottlenecking project at its Segovia operations in Antioquia, which is expected to lift its production from around 200,000ozpa to 300,000ozpa towards year-end at a capital cost of $11-15 million. "We are installing an extra ball mill and relocating the receiving area of material from small miners to have a smother and steady operation. We expect to have this done by the end of the year," said Woodyer.

Work is also progressing at its $280 million Marmato underground development in Caldas. The first gold pour is scheduled for year-end 2025, and the mine will ultimately produce 162,000 ozpa over a nearly 20-year life.

Together, the developments at Segovia and Marmato will lift the company's production to more than 400,000 ozpa, with Soto Norte potentially able to take it to 600,000 ozpa. Further growth could come from its Toroparu deposit in Guyana, although the company first needs to understand many things.

"This is a good asset in quantity and grade, but it is our number four asset after Segovia, Marmato and Soto Norte. Fortunately, the holding costs are reasonable. There are two issues to understand: the location and associated infrastructure, including the rain and rivers, and do we have the right solution for the power. We are studying those. The country is going through dramatic change [president Mohamed Irfaan Ali is looking to invest Guyana's oil bonanza in building infrastructure], and they understand how we are looking at this," said Woodyer.