Aris Mining (TSX: ARIS; NYSE-A: ARMN) has released a prefeasibility study for its Soto Norte gold project in Colombia, outlining the characteristics of both a profitable and environmentally friendly mine operation. Its shares rose on the news.
The study, using a base case gold price of $2,600 per oz., gave Soto Norte a 22-year initial mine life with total production of 4.3 million oz. gold, 18.8 million oz. silver and 84 million lb. copper. The metals will be mined from an underground reserve base of 20 million tonnes grading 7 grams gold per tonne, 32.1 grams silver and 0.2% copper.
From this production profile, the study calculated an after-tax net present value at a 5% discount of $2.7 billion, an internal rate of return of 35%, and a payback of 2.3 years from the start of operations. The initial capital is pegged at $625 million, while all-in-sustaining costs are estimated at $534 per oz. over the life of mine.
The study results sent Aris Mining shares 4.1% stronger to a new all-time high of C$12.56 apiece by mid-Wednesday for a market capitalization of C$2.54 billion. The stock has more than doubled this year.
Scaled down
An important change in the study, as Aris points out, is a new design that reduces Soto Norte’s plant processing capacity to 3,500 tonnes per day from the 7,200 tonnes envisaged in a 2022 feasibility study. This would result in a small-scale mine operation, with production spread out over a longer mine life (from 11 years previously), with more emphasis on reducing its environmental footprint.
About 20% of the capacity, or 750 tonnes, will be reserved to process material purchased from local community miners, providing a “safe, regulated alternative that removes mercury use and ensures proper tailings and water management,” the company said.
“The Soto Norte PFS outlines a project that balances scale, profitability, environmental stewardship and community input,” CEO Neil Woodyer said, hailing it as “one of the most attractive gold projects in the Americas.”
Local communities
He highlighted the company’s plan to process material mined by local community groups will replace informal mills that pollute waterways with safe, licensed processing.
“All mine water will be collected, treated and safely returned, safeguarding the Bucaramanga and regional water supplies and improving water quality in the local community mining areas,” Woodyer said.
Until Soto Norte’s processing plant is operational, some material can be processed at the company’s Segovia operations or Marmato complex in Colombia, both of which are currently in production. Aris aims to follow a similar “partnership” model implemented at Segovia for the Soto Norte project, which is currently held under a 51/49 joint venture with Mubadala.
With the study completed, the company plans to proceed with environmental studies in preparation for a licence application early next year.
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