Aris Mining to exit Canada after $25M deal

[Ben Graham]

Aris Mining (TSX: ARIS; NYSE-A: ARMN) is set to leave Canada with the sale of its Juby gold project, its sole Canadian asset, to McFarlane Lake Mining (CSE: MLM) in an investment deal scaled up to $25 million.

The deal is to see Aris become a 19.9% shareholder in McFarlane Lake, and consists of up to $15 million in bridge financing from a syndicate of lenders and a non-brokered equity offering of up to $10 million, the company reported Monday. The specified terms of the deal bring more structure to it than when it was previously announced last month.

Juby is located in Northern Ontario, roughly between Timmins and Sudbury.

“Execution of this transaction allows McFarlane to take hold of what I believe is one of Ontario’s premier undeveloped gold deposits,” McFarlane Lake Chair and CEO Mark Trevisiol said in a release. “It represents the first step in the process of unlocking value at the Juby Gold property, in a gold market where almost all producers are experiencing unprecedented cash flows.” 

Aris, led by CEO Neil Woodyer who also founded Endeavour Mining (LSE, TSX: EDV) and Leagold Mining, has its main projects in South America. While the McFarlane deal ends the company’s projects in Canada, it hasn’t stated any plans to move its Vancouver headquarters or delist from the TSX.

Colombian mines

Its primary Segovia mine is in Colombia’s historical Antioquia district where a second mill joined production last month as it aims for 300,000 oz. output next year. Bringing the Marmato bulk‑mining project online by the end of next year could push total production above 500,000 oz. once fully ramped.

Juby is an exploration project hosting 21.3 million indicated tonnes grading 1.13 grams gold per tonne for 773,000 oz. contained oz., according to a 2020 resource. It also hosts 47.1 million inferred tonnes at 0.98 gram gold for 1.4 million contained ounces.

Resource update

McFarlane has also started working on a resource update for Juby and plans to drill about 10,000 additional metres on the project, work that is expects will raise Juby’s ounces, the company said earlier this month.

McFarlane shares shot up 27% to a new year-long high of C$0.09 apiece on Monday morning in Toronto, for a market capitalization of C$27.8 million.

The bridge financing portion of the deal is to fund the cash portion of McFarlane’s acquisition bid for Juby as well as an interest in Aris’ nearby Knight properties. McFarlane has the option to raise the bridge financing to up to C$20 million. The company will issue lenders up to 48 million common shares in the deal at 15¢ each.

In the equity offering, McFarlane is to issue up to 92.6 million common and flow-through shares at C$0.15 apiece to raise up to C$10 million. The deals are expected to close by Sept. 11.