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Aris Mining

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September 16, 2024 at 11:40 AM (MDT)|Broadmoor Hotel & Resort

Neil Woodyer

CEO

Neil Woodyer was a founder and the CEO of both Leagold Mining and Endeavour Mining. He has an extensive history in the mining sector creating growth strategies, implementing financing plans, and leading management teams. In 1988, Mr. Woodyer was the founder of Endeavour Financial, a successful mining merchant banking and advisory business. In 2009, he and Frank Giustra devised Endeavour’s growth strategy and as CEO, Mr. Woodyer led Endeavour Financial’s transition from a financial company into a mine operations and development company, Endeavour Mining. Endeavour grew through a series of acquisitions and new mine builds to become one of the largest gold producers in West Africa. In 2016 Mr. Woodyer was a founder and CEO of Leagold Mining which developed gold mines in Mexico and Brazil. In early 2020, after Leagold merged with Equinox Gold and he, along with other team members and number of mining entrepreneurs, created Aris Gold (now Aris Mining) to again follow the strategies that Endeavour and Leagold proved to be successful.

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Yes. Our final presentation running the anchor leg for this session is from Aris Mining. We have Neil. Would you to speak to us today? He is the CEO of the company. Please take it away, Neil. Thank you, Brian. And can I first of all apologize for not following the correct dress code, my suitcase and I departed company in Paris yesterday and I hope we'll get together in the next 48 hours. But I'm not here to complain about Air France. I'm really here to tell you something about the Aris Mining story and if I can make this work, we'll start off. No, I can't. No. Oh, yeah, disclaimer. I'm sure you're going to read that in detail the story. So just over 3.5 years ago, we started Ari, we've done a couple of previous companies before we built them up. We thought we'd do it again with Ari. We raised between family and friends about 35 million. We borrowed 85 from Orion. And then we approached a company called Caldas Gold who owned a mine in Colombia called Mama, a small mine very, very narrow vein producing a say 25,000 ounces. But they had plans to expand by building a lower mine for about 160 million. Sorry, 260 they were actually short 85. So we said to them, here's our 85 but you have to give us management and you have to give us the board. They did. So we became Caldo Gold. The next thing we did, we saw that Mubadala had the So Norte project, an old I Batista project of about 8.5 million ounces again in Colombia, but it stalled in its development. So we approached them. And after a long long negotiation, we acquired 20 per cent of the Soe Norte project. We also acquired the management of it. Subsequently, we closed about a month ago and we now own 51% of the project. We then looked at having two construction assets or development assets and no production. So we approached Segovia which was generating about 200,000 ounces a year and a bit of about 141 150 million. It also had about 40 per cent of its production coming from small miners, which is extremely important within the Colombian context. I'll explain later. So this was a chance to get hold of a cash producing asset. So two years ago, we merged with them and became Aris mining. So where do we stand today? We have two mines producing 200,000 ounces. We have construction under way at the two mines for about $300 million to take us within about two years. Just short of 500,000 ounces. We have the finance to do that. We have 120 million in the bank. We have Segovia producing another say 120 million a year. And we also have a streaming deal with Wheaton which will produce another 114 million a year. So we have the funds to take ourselves up to 500,000 to 500,000 ounces. We are now listed on the New York Exchange. Our market cap is about 850 us and we joined the index on Friday. So that's where we stand. That's where we've come from for the last 3.5 years. Our strategy is to carry on building and buying, build and buy strategy that we've followed in the past. And I look back at Endeavor and I look back at their gold and I look at the assets that we've accumulated over the last 3.5 years compared with the assets that we had then. And I have to say these are better assets, the grade is higher, the reserves are there and the opportunity is there to go forward. So feel very happy with the position that we're in now. But let me if I can turn the next page going the wrong way to look at the assets that we have. Now, we have the two operating assets. Segovia producing 200,000 ounces a year. And as I said, 50 per cent of its capacity comes from small miners. And we are now taking that from 200,000 ounces to 300,000 ounces a year by de bottlenecking and changing some of the plant. We should have that complete round about the end of this year. So some stage next year, we will producing at an annual rate of 300,000 ounces. At Segovia, we have Mama, the small upper mine, we have the lower mine that is now under construction 280 million. It's pretty much on schedule. It's pretty much on budget, it should be complete. By the end of next year, we have the two development projects again. So Norte 8.5 million ounces that we're going through a redesign phase, which I'll pick up in a minute. And we have Toro Peru in Guiana, which is a project with 5.4 million ounces at 1.51 0.5 g. So when we look at the projects, obviously, the priority is to develop our two projects as we are now up to 500,000, the next one is to focus on. So Norte and the fourth asset in the line is Toro Peru. So we feel strong with our assets, we have the money to do it and we're going ahead and doing it. This gives you an idea of where they're located in, in Colombia. And I'll take the opportunity to just talk a little bit about gold in Colombia. Colombia is basically officially ranked as about the 45th gold producer in the world. However, that's really not the true story. 85% of the gold that is mined in Colombia is illegal, only 15% is from formal sources. So if you translated that into into ounces of production, it is actually about the 10th largest gold producer in the world. So much of it comes from the small miners who've been mining for 450 years at Mama, they'd been mining for 450 years at Segovia over 200 years. And what we found is that as I said, one of the attractions of the acquisition of Segovia was to bring us face to face with a small miner situation. Segovia had been buying material from various groups of small miners. We expanded that what we did was say that if you look at the small miners situation where you have families and small groups of miners, if you can work with them, both sides are better off. If you look at it, they know the territory far better than we do. They know the local communities far better than we do. They can mine on a smaller scale than we do. If you can combine their skills with our skills, our capital, our commercial industrial mining skills are processing with what they're doing. You get a very much stronger team between the two of us. At the moment, the small miners are producing gold recovery of about 40 per cent. We recover it 90 to 95 per cent. Therefore, there's a huge amount of money left on the table. Go between us, go to the government, go to the communities and improve the government, our profitability and the communities. And that's the approach we've taken. We help them formalize, we have our lawyers work with them so they can become legal. They get their tenements sorted out. We have our health and safety people, we have our exploration people, our operating people working with them. And importantly, we treat them as well as partners by they share in the gold price, we pay them based upon the grade and the actual goal price. So they truly participate as we do. And this has been absolutely superb. We have 3500 small miners at Segovia and they're grouped together into 40 groups. So we have 40 commercial contracts. These aren't individual guys, they are groups of guys. We took this basis and went to mama and we formalized a group there and we gave them one of our levels on the upper mine and they're now mining that and they're mining it more efficiently than we were able to do. And we're concentrating on the lower mine building the lower mine and we will mine the upper mine and we are progressively giving them more and more of our infrastructure at the upper mine so that they will be able to take over. We'll carry on processing, but they'll carry on mining. We're producing about 25,000 ounces. They could probably reduce 35 to 40,000 ounces at it. They're more efficient at the small mining than we are. The additional advantage of this is from an, from an environmental point of view. They're using mercury. They don't give a damn about the tailings, they get left behind, they go into the river all sorts of damage. So environmentally community, we are improving our social license at these areas. So we've improved our social license at Amato, which did help us get the extensions approved so that we're doing the lower mine. Now we're doing the same thing at. So Norte, we've taken the same concept at. So Norte to be able to work with the community and where Mubadala had opposition from the community, we now have the support of the six mayors and the governor in our plans going forward. So this whole concept of using the small miner and working with a small miner increases our profitability, increases our license and enables us to move around the country in different kind of ways. How am I going for time? Ok. I better speed up. Sorry, I get a slight emotion on that. Subject but we'll carry on. So, Segovia, so as I say, we're expanding from 200 to 300,000 ounces. Very high grade, probably the second highest grade mine in the world. 11.6 g. We have 1.3 million ounces of reserves all in sustaining costs 1400 to 1500. But the higher the gold price goes, the higher our all in sustaining cost goes because the small minor purchases where they participate in the gold price are part of that. So as the gold price goes up, our all in sustaining costs will go up but the margins pretty steady, continue business from their side of it expansion. Well, under way, we're putting a new bore mill in. We're changing the plant configuration. We're changing the loading area, the receiving area for the small miners will be complete by the end of the year and it's cost us $20 million to add another 100,000 ounces and bear in mind was producing something like 120 million, 130 million all in sustaining margin. And we're adding 50% of that for $20 million. Mamata lower mine, as I said, the small upper mine which we're handing over progressively to the small miners, our partners and, and the the lower mine that we're under construction now, the license we got about 18 months ago. No, about a year ago. Construction. Well under way, looks like we'll get it finished by the end of next year and looks like we'll be in budget will be producing about 160,000, sorry, 1160 ounces a year. Sorry, get my numbers right, 160 ounces a year. Mine life currently is 20 years, obviously, once it's working, we will look to adjust that and shorten the mine life and get higher production. But we need to prove that it works and go through that process first. So a good quality long life asset and then of course, the so no project, as I say, we now own 51 per cent and we have full control over it. We looked at the mine that Mubadala were building $1.3 billion 450,000 ounces a year, all in sustaining cost of 500. And we decided that was not the right mine to build. The risks were too high. They had a seven kilometer tunnel between the processing facilities and the mine up in the high Andes, not the simplest thing to do. They also had a mine plan that was looking because it was based upon Batista's theory of the maximum amount of ounces. So we told them that wasn't going to work. We weren't going to do it. We would build a smaller mine if they gave us control at 51 per cent, they did. And in exchange for that. They are now just under 10 per cent shareholders of Aris. So it costs us no cash to get that situation. So we're now redesigning the mine and we should have a small mine redesign through pre feasibility and some additional feasibility work by I think January February next year. Ok. As I say, the important thing is we now have the community on side because we will be building into the mine structure capacity to process small miners may even be 507,000 ounces a year which will add to our total production. But it also enhances the acceptability of a project. It enhances our social license. And as I say, we are getting tremendous support from the communities and the governor for doing that looks like we're going to end up with time for questions, which is always a bad thing to do, but nevertheless, I'll carry on. So in summation, where do we stand? OK. Our team's been together a lot of us for 15 years. We're doing it now in a fantastic country. The potential of Colombia is huge. It is so undeveloped from a commercial mining. Gold mining point of view has so much history has so much gold, but very little of it is 43 101. So there's only two other commercial miners besides ourselves. The Chinese have a mine and mine have their dredging system of size. So it's very difficult to grow by acquisition, it's impossible to go by acquisition. The only thing you can do is to grow incrementally and using the small miners, improving our license and adding on expanding our assets is the obvious way to go. We can get in excess of 500,000 ounces. Well, in excess of 500,000 ounces over a period of time out of Colombia then because we have a buy and build strategy and we want to increase the portfolio of our company. We will have to look elsewhere. Today is not the time to do that. The day is now to get two mines built, to prove those things and develop the small minor concept and to get so Norte improved. And as we stand today, we have the cash and capability of doing that and we have a clear path forward to do it and to say the potential that we find there is superb but limited. So at some stage, we have to refocus. But in the meantime, we're going to over 500,000 ounces in the next two years. And we can see that increasing in Colombia over the next four or five years. That is the story as it stands today and we do have some time for questions. There's a question at the back. Oh, wait, just wait for the microphone, please. You've been very good at at finding geologically well endowed jurisdictions and, and doing incredibly well in them. I mean Colombia obviously fits the bill, although it's a very different model and particularly just buying in. I, I can't think of any other major companies operating like that. But now in Colombia it makes sense. Could you help reassure us or explain to us your confidence about Colombia's jurisdiction and a more general macro top down geopolitical political sense. I think the perception is far, far worse than reality and the perception goes back to some movies that were very popular a few years ago. And undoubtedly there is a history there that we have to overcome. But it, and somebody said at a conference a couple of days ago, there has never been a dictatorship in Colombia. It has always been a democratic transition. Somebody's actually queried that we're actually trying to find out if that's right. But essentially there has not been a dictatorship. It's been a transition. The country is now left of center, strongly left of center, but it has a large number of institutional checks and balances. It's really a country designed by lawyers with various levels of check and balance that come in check and balances are so strong that an individual government official can be sued for the rest of his life for whatever decision he made in the government, which tends to have a very negative decision making ability slows things down. So yes, that there is an emotional obvious history associated with Columba. I believe the reality today is different. The economy is doing well. Growth is there, there are no restrictions on what we do. Taxes are reasonable support from the government. We work very closely with the Minister of Mines is strong. We feel very comfortable in Colombia. Yeah. All right. Your strategy with the small miners. It seems to make a lot of sense but 40 groups sounds like a lot of groups and a lot of people. How do you, how do you manage that? How will you manage it going forward? We, we, we have a whole small miners unit that when a group comes forward, we're able to go to their property, look at it, inspect it from a technical point of view, we're able to do the necessary security background checks on them and then we start developing a plan with them. So having done all that, we do have a number of people who are dedicated to small miners from a security point of view, a number who are dedicated from the environmental geological and again, a number for health and safety. And that's how we do it. We have a very detailed contract between us and them as their responsibilities and our responsibilities. And it's a fair amount of work, but we're not digging it out of the ground. They are cheaper than we can, which is the whole essence of it. So we're getting the economic benefits and that does take us completely to the end of the time. Please join me in. Thanking Neil.


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