Aris Gold shares up 23% on Colombia mine deal

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Aris Gold Corp. [ARIS-TSX, ALLXF-OTCQX] shares rallied sharply Monday after the company said it has agreed to acquire a 20% joint venture interest in the Soto Norte gold project in Colombia, with the option to purchase another 30% interest.

The Soto Norte project, which has been held privately since 2011, is one of the world’s largest feasibility-stage projects with high grade mineral reserves, low capital intensity, low operating costs and district-scale potential.

The project has probable mineral reserves of 24.8 million tonnes at 6.22 g/t gold, 34.4 g/t silver, and 0.18% copper, or 5.0 million ounces of gold, 27.4 million ounces of silver and 107 million pounds of copper.  Indicated mineral resources stand at 8.5 million ounces of gold. On top of that is an estimated 3.6 million ounces of inferred resources.

Aris Gold shares advanced on the news, rising 23.3% or 35 cents to $1.85 on volume of 546,850. The shares are currently trading in a 52-week range of $2.70 and $1.21.

Aris is acquiring the interest in Soto Norte under an agreement with MDC Industry Holding Co LLC (Mubadala) a unit of Abu Dhabi-based investment company Mubadala Investment Co. PJSC. Upon closing, Aris and Mubadala will form a joint venture company that will oversee environmental licensing, project development and construction, as well as mine operation.

Aris will be the project operator and the partners will share project costs on a pro-rata ownership basis.

Aris is paying US$100 million in cash to Mubadala for the 20% project stake. Closing is expected to occur in April, 2022. Mubadala is retaining a precious metals streaming interest on 7.35% of payable gold and 100% of payable silver. The stream will only apply to incremental production after the first 5.7 million ounces of gold has been produced. This is expected to be achieved following depletion of the current mineral reserves and 30% of the current indicated mineral resource.

The deal is expected to be transformational for Aris Gold. Together with its Marmato mine, which is also located in Colombia, and is expected to produce 175,000 ounces of gold annually when both the Upper Mine and Lower Mine are in operation, the transaction will position Aris as a significant mid-tier gold producer with attributable production exceeding 400,000 ounces of gold annually at an all-in-sustaining cost of around US$650 an ounce and generating significant cash flows.

Aris Gold has completed a feasibility study technical report on the Soto Norte project which offers a complete project description.  Soto Norte is designed as an underground mine with 2.6 million tonnes annually of processing capacity and an estimated US$1.2 billion of initial capital costs.

The feasibility study envisages average production of 450,000 ounces of gold annually, life of mine average all-in-sustaining costs of US$471 an ounce. Sine 2015, extensive technical studies and engagement with the local communities were undertaken in preparing an initial Environmental and Social Impact Assessment (ESIA).


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