Gold Mining is Hard Enough

Venezuela Votes to Annex Guyana’s Essequibo Region

Nicolás Maduro, president of Venezuela (2013 Alamy photo)

Hi folks,

Gold prices soared to a record $2,152.3 on Sunday, then dipped 2% today. A new bull market is underway.

ARIS Mining (TSX:ARIS, NYSE: ARMN) is set to churn out about 20,000 ounces of gold monthly this year. With costs at $1,139 per ounce, they're raking in almost $17.5 million net each month – that's about $585,000 every day (all figures US dollars).

ARIS is sitting pretty with five excellent projects and solid finances. But there's a slight snag this week you should know about.

Venezuelans voted to annex a huge chunk of British Guyana called Essequibo yesterday, where ARIS has a forgotten development project.

Photo: SurinameCentral via Wikimedia Commons

Media reports suggest the referendum was mostly symbolic and expected. Venezuela probably won't use force to enforce it and would face big international resistance if it tried. Still, it’s possible to stall movement on one of ARIS’s growth levers.

Venezuela's been eyeing Essequibo since the 1899 border was drawn. The International Court of Justice just warned Caracas to back off.

Analyst Phil Gunson says, in tough times, governments often rally folks with patriotic moves, and that's Maduro's game here.

Why it matters for ARIS Mining:

Most of ARIS's gold is in Colombia, but its fourth best asset is in Essequibo.

Toroparu's a huge gold-copper deposit with 6.6 million ounces (M&I+Inferred). Gran Colombia snagged it for $252 million in stock in 2021 and then merged with ARIS.

ARIS investors have forgotten about Toroparu, but it's a gold mine, literally. There’s been chatter in the industry about selling it, potentially to fund Soto Norte, ARIS’s world-class development project.

China's Zijin Mining operates nearby Toroparu. I doubt they're spooked by Venezuela's move, but other suitors might hold off transacting on it.

I have a contact who is a Venezuelan mining insider. His take on the referendum: This will have no impact on Toroparu. It's a distraction by Maduro. Essequibo is an "impenetrable jungle" for a potential invasion.

Even without Toroparu, and I do think they get value for it eventually, ARIS Mining looks solid. They have a clear pathway to over 500,000 ounces of gold production in 2026 at competitive costs without requiring additional capital. With a market cap of $484 million, it’s a compelling gold growth story, and my largest mining investment.

ARMN closed down 1.5% to $3.17 Monday. The stock is up about 21% in the past month.

I lay out my bullish thesis here and here.

PS - Spent last week with a rogue American billionaire, an industry pioneer. Working on a compelling story about his trade secrets. Stay tuned.