Aris Mining (US:ARMN)2020-08-14 17:52Financial Data and Key Metrics Changes - In Q2 2020, Gran Colombia Gold reported a revenue increase driven by higher realized gold prices averaging almost $1,700 per ounce, despite lower sales volumes [6][14] - Adjusted net income rose to $17.5 million in Q2 2020, up from $14.1 million in the same quarter last year, contributing to a first half adjusted net income of almost $39 million, a 43% increase year-over-year [7][15] - The company experienced a net loss of $18.6 million in Q2 2020, primarily due to a $35 million non-cash loss on financial instruments related to warrants [6][16] Business Line Data and Key Metrics Changes - Gold production in Q2 2020 dropped to 48,000 ounces from 58,000 ounces in Q2 2019, with a total of 226,000 ounces produced over the trailing 12 months compared to 240,000 ounces the previous year [9][10] - Segovia's production was significantly impacted by COVID-19, with only 11,400 ounces produced in April, but production stabilized at about 16,500 ounces per month from May to July [10][11] - Marmato faced a nearly 40% production decline in Q2 2020, but production improved by 15% in July [11] Market Data and Key Metrics Changes - The trailing 12-month total cash cost was approximately $684 per ounce, expected to improve in the second half of the year as production normalizes [13] - The company’s adjusted EBITDA for the trailing 12 months stood at about $166 million, a 13% increase over 2019 [14] Company Strategy and Development Direction - Gran Colombia plans to continue its exploration program in Segovia, which was paused due to COVID-19, and aims to ramp up production with the addition of the Carla mine [18] - The company has initiated a quarterly dividend program, declaring a dividend of $0.015 per share, reflecting confidence in its cash flow generation [17][19] - The management emphasized a cautious approach to capital spending and production guidance due to ongoing COVID-19 challenges [39] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 but expressed optimism about the company's ability to adapt and maintain operations [3][4] - The company remains focused on improving operational efficiencies and expanding production capabilities, particularly at Marmato and Segovia [48][49] Other Important Information - Gran Colombia has a strong cash balance of $88 million as of June, with plans to utilize part of this for debt reduction and potential future investments [16] - The company is exploring opportunities for flow-through financing for its Juby project, indicating a strategic approach to funding future developments [54] Q&A Session Summary Question: Dividend payment plans and warrant adjustments - An analyst expressed gratitude for the dividend announcement and suggested adjustments to warrant strike prices in light of the new dividend policy [21][22] - Management clarified that there is dividend protection for Gold Note holders and emphasized that the decision to pay dividends was based on strong earnings [27][29] Question: Thoughts on dividend sustainability - Another analyst inquired about the rationale behind the $0.015 dividend and future dividend-setting factors [33] - Management explained that the dividend was set at a sustainable level relative to free cash flow and will be monitored for potential increases [34][36] Question: Capital spending and production guidance - An analyst asked for insights on capital spending and cash costs for the second half of the year [37] - Management indicated that capital spending would remain consistent with the first half, focusing on ongoing projects and the Carla mine [40][41] Question: Marmato expansion timelines - An analyst sought clarification on the timelines for Marmato's expansion plans amid rising COVID-19 cases [46] - Management provided details on the revamping of the upper mine and the contractor mobilization timeline for the lower mine [48][49]