Aris Mining's Costs Climb: Can Margins Hold Up Amid Inflation?

Aris Mining Corporation ARMN reported an increase in its second-quarter all-in-sustaining costs (AISC) per ounce, a key indicator of cost efficiency in mining. The Segovia Operations in Colombia, a cornerstone of Aris Mining's portfolio, reported AISC of $1,681 per ounce, up from $1,570 per ounce in the prior quarter and $1,571 per ounce in the year-ago quarter, partly driven by higher sustaining capital expenditures. Consolidated AISC increased around 6% year over year to roughly $1,787 per ounce. 

The year-over-year upside in ARMN’s costs in the second quarter stemmed from higher costs in purchased mill feed from Contract Mining Partners (CMPs), increased royalty and social contributions costs, and the impact of an uptick in mining costs. Despite the cost lift, AISC margin stayed healthy and climbed 199% year over year, driven by higher realized gold prices and sales volumes that led to a surge in gold revenues.

ARMN’s AISC escalation indicates a deterioration of cost efficiency. The high inflation rates in Colombia affect Aris Mining’s operating costs. Higher reliance on CMPs has also led to increased costs. To sustain margins and support its growth initiatives, ARMN must urgently address this through operational discipline and tighter cost oversight.

Among ARMN’s peers with exposure in Colombia, B2Gold Corp. BTG also reported a roughly 22% year-over-year increase in the consolidated AISC of $1,519 per ounce in the second quarter. B2Gold saw higher costs partly due to lower sales ounces resulting from the timing of shipments from its Masbate and Fekola mines. B2Gold sees AISC of $1,460-$1,520 per ounce for full-year 2025 for Fekola, Masbate and Otjikoto mines. 

AngloGold Ashanti plc AU saw higher total operating costs in the second quarter, including increased royalty expenses and costs associated with the initial inclusion of Sukari, elevated costs related to legacy TSFs and higher costs relating to mining contractor rate adjustments. AngloGold Ashanti’s total cash costs per ounce were up 8%, while AISC per ounce increased 7%. AngloGold expects consolidated AISC in the band of $1,580- $1,705 per ounce in 2025.

ARMN’s Price Performance, Valuation & Estimates

Shares of Aris Mining have shot up 132.6% year to date against the Zacks Mining – Gold industry’s rise of 82.3%, thanks to a surge in gold prices.

From a valuation standpoint, ARMN is currently trading at a forward 12-month earnings multiple of 5.75, a roughly 59.3% discount to the industry average of 14.14X. It carries a Value Score of A.

The Zacks Consensus Estimate for ARMN’s 2025 and 2026 earnings implies a year-over-year rise of 205.9% and 64.5%, respectively. The EPS estimates for 2025 and 2026 have been trending lower over the past 60 days.

ARMN stock currently has a Zacks Rank #5 (Strong Sell). 

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This article originally published on Zacks Investment Research (zacks.com).

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