Aris Mining Corporation Q3 FY2024 earnings call

• Bill Zartler noted Aris had a strong third quarter with steady produced water volumes, increased completions driving recycled water demand, lower CapEx post first-half capital program, excess cash for reinvestment and shareholder returns, and evaluating inorganic opportunities.
• Amanda Brock highlighted achieving 2024 commitments, produced water and recycled water volume growth, operating margin improvement, adjusted EBITDA growth, capital efficiency, beneficial reuse progress with desalination testing nearing completion, and mineral extraction evaluation.
• Stephan Tompsett discussed adjusted EBITDA results, CapEx for the year, Q4 volume outlook, adjusted EBITDA guidance for Q4 and full year, balance sheet status with net debt and liquidity, and declared Q4 dividend.

Produced water volumes grew 2% sequentially and 6% year-over-year in the third quarter. Recycled water volumes grew 25% sequentially and 16% versus Q3 last year. Adjusted EBITDA in Q3 was $54.3 million, up 9% q-o-q and 21% y-o-y. Operating margin was $0.45 per barrel, up 13% y-o-y. Revenue contribution from produced water and recycled water is driven by volume growth and margin strength.

• Increased 2024 adjusted EBITDA range to $208 million to $212 million.
• Anticipates Q4 adjusted EBITDA of $51 million to $55 million.
• Capital investment in 2025 depends on customer growth and organic opportunities, with expectation to grow alongside existing customers at similar capital investment level as 2024.

• Commodity price volatility could offset margin benefits from increased skim oil recoveries.
• Variability in skim oil recoveries, especially related to flow back of large pads.
• Regulatory changes like New Mexico setback rules could impact operations, though current customer adjustments mitigate immediate impact.
• Narrow bid-ask spreads in inorganic opportunities, making it challenging to find assets meeting criteria.

Q: John Mackay asked about 2025 produced water volume growth and disposal royalties.

A: Amanda Brock said they expect mid-single-digit growth tied to customer growth, and are looking at buying surface acreage to reduce royalties.

Q: Jeffrey Campbell asked about regulatory update on produced water disposal.

A: Amanda Brock discussed beneficial reuse as an alternative to disposal and ongoing regulatory progress.

Q: Wade Suki asked about inorganic opportunities.

A: Amanda and Bill Zartler said they're disciplined, looking for strategic assets meeting criteria, and bid-ask spreads haven't narrowed enough yet.

Q: Praneeth Satish asked about 2025 growth and dividend.

A: Stephan Tompsett said they'll focus on sustainable dividend growth in line with organic EBITDA growth.

Q: Jeremy Tonet asked about capital allocation and desalination projects.

A: Amanda Brock said they focus on core business, with desalination and mineral extraction projects ongoing but no additional major projects planned soon.

Q: Charles Bryant asked about New Mexico setback rule impact.

A: Amanda Brock said customers have adjusted schedules to mitigate potential impact.

Q: Sean Mitchell asked about skim oil recovery improvements.

A: Amanda Brock said it's due to dedicated teams and operational changes focusing on skim oil recovery.