Fitch Ratings has affirmed Aris Mining Corporation's (Aris Mining) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+'.
Fitch has also affirmed Aris Mining's senior unsecured notes at 'B+' with a Recovery Rating of 'RR4'. The Rating Outlook is Stable.
Aris Mining's ratings reflect its low leverage and robust profitability, which bolster its growth and diversification strategy. However, the ratings are constrained by the company's relatively small operational scale, rising costs due to increased reliance on Contract Mining Partners, heavy dependence on a single mine (Segovia) for cash flow and the remaining execution risk from its diversification projects. Fitch's current forecast only factors in Aris Mining's brownfield expansions at Segovia and Marmato in Colombia. We expect gross leverage to be about 1.9x throughout the rating period, with EBITDA interest coverage of approximately 7.8x.
Key Rating Drivers
Starting Ramp-Up: Management expects the Segovia plant expansion to be commissioned in June 2025 and to gradually ramp-up to its 3,000 tpd production rate during 2H25 and construction of the Marmato lower mine to be completed in late 2026. Fitch projects a production increase of approximately 260,000 oz of gold by 2025, 340,000 oz by 2026 and 475,000 oz by 2027. Segovia will contribute about 90%, 85% and 65% of total production in those years as the Marmato mines ramp up.
Fitch expects Aris Mining to carefully manage its alternative capex plans while it evaluates the Soto Norte project in Colombia and the Toroparu project in Guyana, which are not included in Fitch's base case.
Contract Mining Partners Reliance: Local artisanal contract mining partners accounted for approximately half of Segovia's production in 2024 but will decrease to around 45% as the plant undergoes expansion. This production model enhances community support and ensures operational continuity. Aris Mining also plans to utilize artisanal producers in the Marmato and Soto Norte municipalities. However, this model leads to increased cost pressures, since compensation for mill-feed purchases depends on the material's grade and the current gold price.
Average Cost Structure: According to metals consultancy CRU Group, Aris Mining is expected to lower its cost towards the lower part of the third quartile of the gold production cost curve in 2025. The company reported a total all-in sustaining cost (AISC) of USD1,570/oz of gold for Segovia in the three months ending March 31, 2025, while surging prices expanded the AISC margin to USD1,285/oz from USD628/oz a year ago. The Segovia processing plant expansion and higher by-product credits should help alleviate cost pressures once high prices decrease.
Moderate Leverage: Fitch expects Aris Mining to maintain manageable leverage during the construction of Marmato Lower and the Segovia plant expansion. The average gross and net leverage ratios are projected to be 1.9x and 1.1x, respectively, between 2025 and 2027, compared to 3.2x and 1.6x in 2024, with average gross debt of approximately USD485 million. Fitch treats the financing for Marmato Lower (a precious metals streaming arrangement with Wheaton Precious Metals Corp.) as non-debt and assumes the gold-linked notes will be fully repaid. Aris Mining is targeting a maximum gross leverage ratio of 3.0x.
Expansion-Driven Negative FCF: Fitch anticipates that Aris Mining will produce over USD250 million in EBITDA in 2025. We expect capex to remain at around USD200 million, which includes the development of the Marmato Lower mine and expansion of the Segovia processing plant as well as the Wheaton financing. We also expect FCF to remain negative until Aris Mining completes its investment phase in 2027, at which time EBITDA should exceed USD300 million with assumed mid-cycle gold prices
Peer Analysis
Aris Mining produces 260,000 oz from two mining operations in Colombia, comparable to Ero Copper's 240,000 oz of gold equivalent from two Brazilian mines. However, this is lower than IAMGOLD's 800,000 oz from two mines in Burkina Faso and Canada, Eldorado Gold's 485,000 oz from mines in Canada, Greece, and Turkey, and Compania de Minas Buenaventura's 600,000 oz gold equivalent from mines in Peru.
Aris Mining has a mine life of 21 years in reserves (seven at its largest mine), which is longer than Ero Copper's 18 years, Eldorado Gold's 15 years, and IAMGOLD's seven years. Buenaventura's main gold mines have a four-year mine life but benefit from significant silver and base metals production and stakes in long-lived assets like Cerro Verde.
Aris Mining's third quartile cost position is more favorable than Ero Copper's, Buenaventura's, and IAMGOLD's fourth quartile positions but less competitive than Eldorado Gold's second quartile standing.
Aris Mining's expected average gross and net leverage is 1.9x and 1.1x over three years. This is higher than IAMGOLD's 1.5x and 1.1x, Ero Copper's 1.6x and 1.2x, similar to Eldorado Gold's 2.2x and 1.1x, and lower than Buenaventura's 2.2x and 1.7x.
Key Assumptions
Gold prices of USD2,400/oz in 2025, USD2,100/oz in 2026 and USD2,000/oz in 2027;
Gold sales reach 260,000 oz in 2025, 340,000oz in 2026 and 475,000oz in 2027;
Capex is USD190 million in 2025, about USD200 million in 2026 and nearly USD100 million in 2027. These amounts include expenses in Toroparu and Soto Norte. The Marmato expansion includes USD82 million of new streaming financing;
Dividends and stock buybacks remain suspended;
Wheaton Precious Metals financing for Marmato Lower of USD40 million in 2025 and USD42 million in 2026.
Recovery Analysis
The recovery analysis assumes that Aris Mining would be considered a going concern in an event of bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Aris Mining's going concern EBITDA assumption is based on a fall of gold prices in 2025 through 2028 and slow cost reductions.
The going concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which it bases the enterprise valuation. An enterprise valuation multiple of 6.5x EBITDA is applied to the going concern EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considered the following factors: the historical bankruptcy case study exit multiples for peer companies were 4.0x-7.0x, improving financial subfactors, mid-quality assets, and high growth prospects, despite challenging dynamics in a volatile and commoditized industry.
Fitch applies a waterfall analysis to the post-default enterprise valuation based on the relative claims of debt in the capital structure. These assumptions result in a recovery rate for Aris Mining's senior secured notes within the 'RR3' range, but due to the soft cap of Colombia at 'RR4', Aris Mining's senior unsecured notes are rated at 'B+'/'RR4'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Deterioration of the company's liquidity position;
Prolonged strikes or mine closures that would halt or significantly lower gold production;
Large debt-funded acquisitions;
Negative FCF on a sustained basis;
Gross leverage at 3x or higher on a sustained basis;
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Increasing size and diversification over the medium term;
A successful reduction of the company's dependence on Segovia;
An increase in the reserve life of Segovia.
Liquidity and Debt Structure
Aris Mining plans to fund its ongoing capital expenditures and negative free cash flow through cash on hand, ongoing cash flow generation from Segovia and proceeds from the Marmato stream with Wheaton.
As of March 31, 2025, Aris reported Fitch-adjusted cash and equivalents of USD240 million and gross debt of USD523 million. Debt is comprised of USD450 million of senior unsecured notes due in 2029, and USD67 million gold-linked notes, fair value of premia and interests, with yearly payments that end in 2027. No convertible debentures remain after their last exercise in 2024.
Future advance deposits of USD82 million from streaming contracts with Wheaton upon construction completion milestones will help to fund the final stage of the Marmato Lower mine project, which Fitch considers as operational expenditure.
Issuer Profile
Aris Mining is a Canadian-based precious metals miner. It is one of the two largest gold producers in Colombia with two underground operations. Aris is expanding its operations at Segovia and Marmato and considering projects in Colombia and Guyana.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
Aris Mining Corporation has an ESG Relevance Score of '4' for Labor Relations & Practices due to the company's partial reliance on third-party contract mining partners for its gold production, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
Aris Mining Corporation has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to the company's exposure to local unrest in the communities surrounding its Marmato and Segovia mining operations, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
