F-1/A: Aura Minerals Files SEC Amendment, Details Matup Gold Project Feasibility and San Andrès Mine Operations

Aura Minerals Inc. has filed an amendment to its registration statement, providing detailed technical reports for its Matup Gold Project in Brazil, which demonstrates strong economic viability, and its producing San Andrès Mine in Honduras, which continues to show robust operational performance and significant gold reserves.

Summary

• Aura Minerals Inc. filed an Amendment No. 1 to Form F-1 to amend its exhibit index and submit detailed technical reports for its Matup Gold Project and San Andrès Mine.
• The Matup Gold Project in Brazil, a feasibility-stage project, has estimated total Mineral Reserves of 8.49 million tonnes at 1.14 g/t Au, containing 293,000 ounces of gold, with a post-tax NPV of US$96.1 million and an IRR of 27.5%.
• The Matup project is planned as a conventional open-pit mine with a 7-year life, processing 1.3 million tonnes per annum, utilizing gravity concentration and CIL with dry stacking for tailings.
• The San Andrès Mine in Honduras, an operating open-pit heap leach facility, reports total Mineral Reserves of 30.66 million tonnes at 0.44 g/t Au, containing 429,187 ounces of gold, supporting a 4.2-year mine life.
• The San Andrès Mine generated an after-tax NPV of US$203.5 million (at a 5% discount rate) and produced 78,372 ounces of gold in 2024, with an All-In Sustaining Cost (AISC) of US$1,380 per ounce.
• Aura Minerals issued 146,519,452 non-interest bearing contingent value rights (CVRs) on January 13, 2025, as partial consideration for the acquisition of Bluestone Resources Inc., contingent on Era Dorada achieving commercial production.

Sentiment

Score: 8

Explanation: The document presents strong financial results and positive outlooks for both the Matup Gold Project and the San Andrès Mine, indicating robust economic viability and operational efficiency. While some risks and permitting challenges are noted, the overall tone is highly positive regarding the company's assets and future prospects.

Positives

• Matup Gold Project demonstrates strong economic viability with a post-tax NPV of US$96.1 million and an IRR of 27.5%, indicating a profitable investment.
• Matup's short payback period of 2.04 years after start-up suggests rapid capital recovery.
• The Matup project has a robust metallurgical recovery of 93.2% for gold, utilizing a proven gravity/leaching route.
• San Andrès Mine shows robust economic viability with an after-tax NPV of US$203.5 million at a 5% discount rate.
• San Andrès Mine has a low average strip ratio of 0.45:1, indicating efficient waste removal relative to ore.
• San Andrès Mine's All-In Sustaining Cost (AISC) of US$1,380 per ounce is competitive, reflecting efficient operations.
• San Andrès Mine benefits from a 31% reduction in energy costs due to its connection to the Honduran national power grid since 2015.
• Both projects benefit from positive gold price forecasts, with the San Andrès economic analysis using a weighted average of US$2,531/oz for 2025-2029.
• Aura Minerals has expanded its mineral rights position for the Matup Gold Project by 118% (from 28,674 ha to 62,505 ha), indicating significant exploration upside.
• The San Andrès Mine has a long history of gold production since 1983, demonstrating operational maturity and consistent performance.
• Minosa (San Andrès) has signed collaboration agreements with local communities, providing financial support and social investments in education, health, housing, and employment.
• Minosa achieved the Socially Responsible Company Seal from FUNDAHRSE, scoring 94% in ESG topics.

Negatives

• Matup Gold Project's Installation License (LI) was issued only for consolidated areas already deforested, requiring additional land acquisition (31 ha) for native vegetation clearing, which may take 6 months.
• Matup's silver values are considered informative but lack the accuracy for feasibility-level economic evaluation due to analytical inaccuracy and lack of dedicated QA/QC.
• San Andrès Mine's remaining Heap Leach Pad (HLP) capacity of 21.6 million tonnes is currently below the projected Life of Mine (LOM) requirement of approximately 30.5 million tonnes, necessitating multiple expansion projects.
• A draft report for San Andrès' HLP water management system indicates insufficient capacity for a 1-in-100-year rainfall event and recommends progressive closure of 20-30% of the HLP surface area.
• San Andrès Mine's Mineral Reserves show a 22.1% decrease in contained gold compared to the previous estimate (from 551 koz to 429 koz), primarily due to depletion, operational design adjustments, and refined modifying factors.
• A comparison of San Andrès' production blast hole (BH) data with reverse circulation (RC) data suggests a potential 15% positive bias in gold grades in BH data.
• San Andrès' Mine Closure Plan (MCP) has been submitted but is not yet approved by the regulator, and the closure financial provision has not yet been established.
• San Andrès' communities have high expectations and have expressed concerns about pollution, noise, land use changes, biodiversity loss, and social conflicts, including blockades.

Risks

• Changes to long-term metal price assumptions for both projects.
• Changes to input values for mining, processing, and general and administrative costs for both projects.
• Changes to local interpretations of mineralization geometry and continuity for Matup Gold Project.
• Changes to density values applied to mineralized zones for Matup Gold Project.
• Changes to metallurgical recovery assumptions for Matup Gold Project.
• Changes in assumptions of marketability of the final product for Matup Gold Project.
• Changes in assumptions with existing or new agreements for Matup Gold Project.
• Changes to environmental, permitting, and social license assumptions for Matup Gold Project.
• Potential for acid mine drainage (AMD) at Matup Gold Project despite kinetic tests not confirming it, requiring ongoing containment structures and monitoring.
• Delays in obtaining accessory environmental permits (Effluent Discharge, Gas Station, Power Line) for Matup Gold Project could impact project timeline.
• Uncertainty regarding silver metallurgical recovery at Matup Gold Project and potential legal issues with ANM regarding taxation if silver is produced without being declared in reserves.
• Potential 15% positive bias in blast hole (BH) gold grades compared to RC data at San Andrès Mine, requiring further investigation.
• Insufficient Heap Leach Pad (HLP) capacity for the full Life of Mine (LOM) plan at San Andrès Mine, necessitating multiple expansion projects whose feasibility and permitting are not yet fully validated by SLR.
• San Andrès Mine's HLP water management system has insufficient capacity for extreme rainfall events, posing a risk of untreated water discharge.
• Unapproved Mine Closure Plan (MCP) and unestablished closure financial provision for San Andrès Mine.
• High expectations from surrounding communities and potential for social conflicts, including blockades, at San Andrès Mine due to concerns about pollution, noise, and land use changes.
• Uncertainty regarding the environmental authority's confirmation of the 'lifetime environmental permit' covering the entire concession area, including the Buffa Zone, for San Andrès Mine.
• Need for confirmation and initiation of permitting processes for other wastewater discharge authorizations at San Andrès Mine.
• Potential for localized instabilities in pit walls at San Andrès Mine, particularly along fault zones, requiring continuous geotechnical monitoring and mitigation.
• Seasonal rainfall during the wet season (May to November) can impact mining operations at San Andrès Mine, potentially reducing productivity.
• Dependence on contractor for mining operations at San Andrès Mine introduces reliance on third-party performance.

Future Outlook

Aura Minerals plans aggressive exploration to expand and improve Mineral Resources, particularly at the Serrinhas Target, which has the potential to double the Matup Gold Project's existing Mineral Resources. The San Andrès Mine is well-positioned to benefit from favorable projected market conditions for gold, with analysts forecasting continued robust demand and stable-to-positive gold prices. Both projects aim for continued operational efficiency and cost optimization to maximize returns.

Management Comments

• "The Matup Gold Project Feasibility Study has demonstrated that at a gold average price of $1,664/oz, an investment of US$107M would be required to build a processing plant and associated facilities, which over a mine life of 7 years would yield a return on investment of 27.5%."
• "The SLR QP is of the opinion that the Mineral Reserves [for San Andrès Mine] have been estimated in accordance with S-K 1300 and adhere to industry standards."
• "The SLR QP is of the opinion that the data verification for the Mine [San Andrès] identified no significant discrepancies. As a result, the assay and density data within the database are considered appropriate for use in a Mineral Resource estimate."
• "Aura strongly believes that there is an exploration upside in the Project area [Matup] to expand and improve the Mineral Resources, and consequently, the future Projects Life of Mine (LOM)."
• "The SLR QP recommends that the Company [San Andrès] continue active community engagement to address any concerns that arise due to the close proximity of the Mine to the adjacent communities."

Industry Context

The Matup Gold Project is located in the prolific Juruena-Teles Pires Gold Province in Brazil, a region with many gold deposits and occurrences, and is surrounded by other active exploration and operating properties held by companies like Yamana Gold, Anglo American, and Nexa Resources. The San Andrès Mine is situated in Honduras, a region with a history of gold production and active geothermal systems, and operates within a competitive landscape with other exploration companies like MECA maintaining adjacent concessions. Both projects are positioned to capitalize on the strong global demand for gold, driven by macroeconomic uncertainty, inflation concerns, and central bank purchasing, as forecasted by industry analysts.

Comparison to Industry Standards

• The Matup Gold Project's IRR of 27.5% and NPV of US$96.1 million (post-tax, 5% discount) indicate strong economic viability, comparable to successful gold projects globally.
• The Matup Gold Project's metallurgical recovery of 93.2% for gold is high and aligns with best practices for similar gold deposits utilizing gravity and CIL processing.
• The Matup Gold Project's proposed mining methods and equipment selection are conventional and align with industry standards for open-pit operations.
• The San Andrès Mine's All-In Sustaining Cost (AISC) of US$1,380 per ounce is competitive and consistent with industry benchmarks for mature gold operations.
• The San Andrès Mine's mining recovery rate of 95% and dilution factor of 5% are consistent with historical operational data and industry standards for open-pit gold mines.
• The San Andrès Mine's use of Pseudoflow optimization for Mineral Reserve estimation and adherence to S-K 1300 definitions reflect industry-standard practices for robust reserve reporting.
• The San Andrès Mine's transition to national grid power has significantly reduced energy costs by approximately 31%, demonstrating a successful cost optimization strategy compared to reliance on diesel generation.
• The San Andrès Mine's QA/QC program, including the use of CRMs, blanks, and duplicates, generally aligns with industry best practices, though some areas for improvement in duplicate performance and bias investigation are noted.

Corporate Governance

Stakeholder Impact

• Shareholders: Positive impact due to strong economic viability of both projects, potential for increased gold production, and strategic expansion of mineral rights.
• Employees: Positive impact through job creation (Matup) and sustained employment (San Andrès), with local workforce hiring and training initiatives.
• Customers: Positive impact through continued supply of gold to global markets.
• Suppliers: Positive impact through ongoing procurement of materials, equipment, and services, with established long-term contracts.
• Creditors: Positive impact due to strong financial performance and cash flow generation, enhancing creditworthiness.
• Local Communities: Positive impact through social investments in education, health, housing, and employment, as well as local procurement opportunities. However, there are also negative impacts and concerns related to pollution, noise, land use changes, and potential social conflicts, requiring ongoing engagement and mitigation.
• Regulatory Authorities: Ongoing engagement and compliance efforts are required for permitting, environmental management, and reporting.

Next Steps

• Continue aggressive exploration at Matup's Serrinhas Target (20,000m DD, 6,000m RC in Phase 1; 22,000m DD in Phase 2) to expand Mineral Resources.
• Conduct further bulk density measurements, relogging for mafic dykes, and re-assaying of silver values for Matup's X1 Deposit.
• Complete detailed mapping of post-mineralization fault zones and a mineralogical study for Matup's X1 Deposit.
• Implement an experienced geotechnical team for monitoring and potential pit angle revision at Matup.
• Establish an electronic dispatch system and maintain a constant 10% oxidized ore blending strategy at Matup.
• Develop commissioning, startup, and operation training plans, and a process team for geometallurgical studies at Matup.
• Anticipate evaluations and negotiations with ANM regarding silver taxation for Matup.
• Intensify social studies and stakeholder mapping, and verify segregation of waste rock with sulfide content at Matup.
• Conduct field acid mine drainage (AMD) evaluation and evaluate wastewater reuse at Matup.
• Complete further exploration testing of oxide and mixed mineralization at San Andrès Mine to optimize boundaries and test depth extensions.
• Continue geological characterization for different material types and maintain cyanide-soluble gold assays for blast hole sampling at San Andrès Mine.
• Investigate process options for sulphide material and advance drilling in the Buffa Zone at San Andrès Mine.
• Conduct detailed sampling and reconciliation studies to assess potential bias in blast hole data at San Andrès Mine.
• Prioritize exploration in the San Andrès III and IV concessions.
• Conduct periodic updates to Pseudoflow optimization models and refine cut-off grade calculations at San Andrès Mine.
• Implement advanced grade control measures and maintain/improve mining recovery rates at San Andrès Mine.
• Conduct ongoing geotechnical monitoring and evaluate opportunities for steeper pit slopes at San Andrès Mine.
• Enhance reconciliation processes and develop predictive models for performance deviations at San Andrès Mine.
• Integrate environmental and community considerations into Mineral Reserve planning at San Andrès Mine.
• Continue column leach testing of ore samples to build the geometallurgy database at San Andrès Mine.
• Review and validate HLP capacity expansion and update HLP stability analysis at San Andrès Mine.
• Review and update environmental operational procedures and continue engagement with environmental authorities for discharge authorizations and permit renewals at San Andrès Mine.
• Standardize ICMAs, tabulate water quality information, and continue social transitioning activities at San Andrès Mine.
• Expand community engagement and ensure a comprehensive third-party review of the Mine Closure Plan at San Andrès Mine.
• Align sustaining capital investments with operational priorities and optimize operating costs at San Andrès Mine.

Key Dates

Recommendation

Keywords

Gold, Mining, Brazil, Honduras, Matup Gold Project, San Andrès Mine, SEC Filing, Feasibility Study, Mineral Resources, Mineral Reserves, Heap Leach, Open Pit, Exploration, Metallurgy, Environmental Permitting, Capital Costs, Operating Costs, Economic Analysis, Aura Minerals