Good morning, everyone, and welcome to Aris Mining Q3 2024 operational and financial results call. We will begin with an overview from management, followed by a question and answer period. To join the question queue, you may press star, then one on your telephone keypad. As a reminder, all participants are in listen-only mode, and the conference is being recorded. If you need assistance during the conference call, you may signal an operator by pressing star, then zero.
Please note that the accompanying presentation that management will refer to during today's call can be found in the events and presentations section of Aris Mining website at aris-mining.com. Also, Aris Mining's second quarter 2024 financials have been filed on SEDAR+ and EDGAR and can also be found on their website. I would now like to turn the conference over to Mr. Neil Woodyer , Chief Executive Officer. Please go ahead.
Thank you, Oliver Dachsel. Hello, everybody, and thank you for joining our Q3 earnings call. Before we begin, please note the caution statements on slide three regarding forward-looking statements. On slide three, I'll give an overview of our operational and financial highlights, after which Richard Thomas, our COO, will discuss our performance and our growth projects at Segovia and Marmato. And then Richard Orazietti, our CFO, will review the financial results, and Oliver Dachsel will then update you on the funding and growth strategy.
Looking at slide three, we're pleased to report a strong third quarter. In Q3, we produced 53,600 ounces of gold, which is up 9% over Q2. Higher gold prices, increased production, and cost controls helped us achieve a 37% increase in all-in sustaining margin at Segovia, reaching $44 million compared with $32 million in Q2. For the 12 months ending September the 30th, we generated an adjusted EBITDA of $147 million and adjusted net income of $43 million. In August, we announced Segovia high-grade exploration results, increasing our resources, and in October, we announced the replacement of our reserves.
Segovia is operating at its 2,000 tons a day design capacity, with expansion underway to 3,000 tons. Phase one of the expansion is completed, and contract mining partners are now delivering to the facility. Phase two is on schedule to be finished late Q1 next year. At Marmato, construction of the lower mine is on track, and by the end of September, the project had reached its 25% spend level milestone, and on the 6th of November, we received $40 million cash installment from Wheaton for the project.
Last month, we strengthened our cash position by refinancing our $300 million notes with a new five-year $450 million 8% notes, extending the debt maturity to October 2029. We're well funded to execute our growth strategy and to continue to target an annual gold production rate of approximately 500,000 ounces by the second half of 2026. And lastly, before I hand over, I just encourage you to read our 2023 sustainability report, which was published in August and is available on our website. And now over to you, Richard.
Thank you, Neil. Moving on to slide four. In the first nine months of this year, our mine produced 152,591 ounces of gold. Segovia contributed 136,106 ounces of gold, while Marmato, our upper mine, produced 17,485 ounces of gold. At Segovia, we produced 7% more material in Q3 than we completed Q2, but a slight increase in Q1. For the full year 2024, Segovia was on track to produce between 185,000 and 195,000 ounces. If we go to slide five, please, I'd like to draw your attention to the graph on the top of the page.
Our realized gold price increased by 6% in the quarter to $2,457 per ounce in quarter three, while our all-in sustaining costs declined 2% to $1,540 per ounce, resulting in an all-in sustaining cost margin of around $117 per ounce. Now, focusing on the lower half of the page, as I mentioned, the combination of higher gold prices, increased production, and effective cost control led to an all-in sustaining cost margin at Segovia reaching $44.1 million, a 37% increase compared to quarter two.
It's also worth noting that despite the production and very difficult development of the high-grade Northeast decline to the off-take target CMP, resulting in an increase from $1,790 per ounce in quarter two to $1,854 per ounce in quarter three due to the higher gold prices. This strength of our business maintained a strong sales margin of $4.9 million in Q3, up from $2.8 million in Q2. If we could move to slide six, Segovia's processing plant expansion has progressed well as scheduled, and phase one has now completed, with the new expanded receiving area for our CMP fully commissioned and handed over to operations.
The new facility began processing material in October. Phase two, which involves installing a second ball mill in the former complex of the producing area, is underway and scheduled for completion by Q1 next year. Following a ramp-up period, we expect to reach approximately 3,000 tonnes per day in the second half of 2025. The total cost of the expansion is still estimated at $15 million, with $8 million being spent as of 30th of September this year. Concluding my remarks on slide seven, I was allowed to update you on the construction progress of Marmato Lower Mine.
We commenced construction of the new Marmato Lower Mine in Q3 2023, following the receipt of environmental license in July this year. The lower mine will access deeper mineralization below the upper mine, with both mines estimated to combine 162,000 ounces of gold per year over a 20-year mine life. As you can see from the pictures on the slide, the site access works and portal cuts were completed in Q2, and the contracts commenced for detailed development on October 8th. Both the SAG mill and the ball mill fabrication are progressing on schedule for completion by the end of the third quarter of this year.
As of September 30th, the estimated cost to complete the lower mine construction is $255 million, of which $132 million will be funded by the existing stream financing. As I mentioned, we received the first $40 million stream financing project milestone payment on November 6th. Further payments of $40 million and $42 million are expected upon achieving 30% and 75% of the construction respectively, and this is expected to happen in 2025. With that, I'd like to hand over the call to our CFO, Richard Orazietti.
Thank you, Richard. We're now looking at slide eight. To state at the outset , we had a strong third quarter, especially compared to the second quarter of 2024. Gold revenue of $131.6 million was up 15% quarter over quarter, driven by higher realized gold price of $2,447 per ounce and higher gold sales of approximately 54,000 ounces, up 9%. Income from mining operations of $38 million was up 28% quarter over quarter, which reflects the upside in gold revenue, partially offset by higher cost of mill feed procured from our contract mining partners and higher social contributions, both due to gold price appreciation.
Despite the strong income from mining operations, we incurred a net loss of $2.2 million, primarily due to a $12.8 million loss on financial instruments. The revaluation of a warrant liability caused by increases in Aris Mining's share price from C$5.7 to C$6.26 per share during the third quarter resulted in a non-cash expense of $11.4 million. We further incurred a $3.9 million loss on our gold loan notes due to the impact of gold price appreciation on the gold premium component of the notes.
On an adjusted basis to better reflect the underlying performance of our business, adjusted EBITDA of $43 million was up 19% quarter over quarter, and adjusted earnings were $12.9 million, reflecting the improved operational performance. Now moving on to slide nine, I'd like to discuss some of the key line items of our cash flow statement. Operating cash flow of $17.2 million was $9.6 million up quarter over quarter due to a higher all-in sustaining margin of $40.4 million, bolstered by the increase in gold and byproduct revenue.
VAT receivable and a buildup of inventory, mainly materials and ore stockpiles, continued to draw on cash flow during the third quarter. Post Q3, Colombian tax authorities assessed us with $29.6 million for the 2023 VAT amount owed. This was partially offset by $16.2 million of corporate income tax paid for the year. As Neil and Richard Thomas discussed earlier, we're in a significant investment period, and we spent $45 million in growth and expansion projects during the quarter, as well as $115 million for the first nine months of this year.
Financing cash flows to service our debt were approximately $7 million for the quarter. This was offset by $4.3 million in proceeds from warrant and option exercises during the quarter. For the nine months to date, we received approximately $29 million in proceeds from warrant and option exercises. In summary, net cash flow for the third quarter was $41.4 million, which resulted in a cash balance of $80.3 million at quarter end. Subsequent to the quarter end, we proactively enhanced our financial position, liquidity, and ability to fund our growth and sustaining projects through the recent debt offering and financing from Wheaton Precious Metals that Neil alluded to earlier.
I would like to turn over the call to my colleague, Oliver Dachsel, to walk you through the recent actions to improve our financial position.
Thank you, Richard. On slide 10, we have summarized these financing transactions that have occurred in October and November, as a result of which our pro forma cash balance has increased from $80 million as of September 30th this year to $266 million. Let me walk you through the adjustments. As Neil had mentioned, we refinanced our existing $300 million notes with a new five-year $450 million notes offering in October. After transaction-related fees and expenses, we added $132 million of net proceeds to our cash position on October 31st upon closing of this financing transaction.
As previously mentioned, we achieved the 25% spend threshold at the Marmato Lower Mine, and on November 6th, we received the corresponding $40 million stream funding installment from Wheaton. We also received a VAT refund of $30 million from the Colombian Tax Authority while paying $16 million of income tax, so a net inflow of $14 million. Now looking at the waterfall chart in the lower half of the page, summarizing the capital requirements of our expansion projects at Marmato and Segovia.
As of September this year, the estimated cost to complete the Marmato Lower Mine was $235 million, of which $82 million will be funded by the two remaining stream funding installments, which we expect to receive next year. This leaves a net construction budget remaining of $153 million. At Segovia, our remaining construction budget is $7 million. In total, for our two expansion projects, only $161 million is remaining to be funded by us.
In addition to our strong cash reserves of $266 million, we have additional funding sources: expected cash flow generation from Segovia in Q4 this year and beyond, together with potential proceeds from warrants of up to $124 million. In short, we're well positioned and funded to deliver on our growth strategy, with current cash on hand and expected future funding sources well above expected capital expenditure requirements for our expansion projects. I now like to hand the call back to Neil to conclude our prepared remarks.
Thank you, Oliver. Now looking at slide 11, and before we open the Q&A, I'd like to emphasize the key takeaways we've reported in this third quarter: 9% production increase over Q2, and Segovia operating at nameplate capacity. Segovia generated an all-in sustaining margin of $44 million, which is 37% improvement over Q2. On the last 12-month basis, we generated Adjusted EBITDA of $147 million and Adjusted Net Income of $43 million, and we had a strong pro forma cash position of $266 million. We're going through a transformational expansion project targeting annual production rate of approximately 500,000 ounces in the second half of 2026. And with that, I'd like to ask the operator to open the Q&A session.
Thank you. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. And today's first question comes from Kerry Smith at Haywood Securities. Please go ahead.
Thanks, operator. Good morning, everybody. Neil, I had a couple of questions. Firstly, on your mill expansion at Segovia from 2,000 to 3,000 tons a day, how are you making out with the expansion of the CMP program to be able to pull in more tonnage from those small miners to help deliver the extra 1,000 tons a day?
Okay. So already, so come quarter one, 2025, we'll be ready to receive extra tonnage. The extra tonnage is coming from both an increase in production from artisanal as well as our CMP miners. We have many contracts, currently 46 of them, and we have 41 waiting to be approved. So we've got a pipeline of small miners waiting to have contracts approved, which we will do from now until end of quarter one. And this will help us to increase our CMP mining production.
Okay, Richard, and how many tons a day are you planning to pull in from the CMPs once you get to 3,000?
We are planning to do 1,800 for Aris, and the rest will come from the CMP.
Okay. And then, sorry, can you just remind me of 2,000 tons a day, what that split is between the CMPs and your own production?
It's 1,200 from that and the rest from CMP.
Okay. So 800. Okay. So you're looking for 400 tons more a day from the CMPs then. Okay.
Correct.
Okay. Okay. Great.
As we ramp up and expand our operations in Segovia, our lines on the CMPs will reduce over time.
Okay. And then, if I heard you correctly, you have, I think you said 48 CMP contracts today that you have in place, and you have another 41 that are waiting to be ratified, if that's the correct word. Did I get that correctly?
Correct. Waiting for approval, yes.
That approval has to come from who? From the federal government or the provincial government?
Those approvals are done by Aris.
Oh, by you?
In conjunction with the. Yeah.
Okay. Gotcha. So it's just a question of you picking the ones that you would like to work with then.
Correct.
Okay.
For strict due diligence purposes.
Yeah. Gotcha. Okay. Great. That's helpful. Thanks. And then just on Soto Norte, maybe Neil can just give me an update on how all of the discussions are going with all of the stakeholders in terms of trying to get a social license there to be able to push that project along.
Thanks a lot, Mr. Smith. On Soto Norte . So currently, good morning. My name is Alejandro Jiménez, Country Manager. Currently, we have been engaging with the local communities, and I've been in the artisanal miners in the area, as well as the six mayors in the province of Soto Norte and the governor of Santander. All of them seem very well aligned with the vision that the company has regarding the new small-scale project in Soto Norte. We are continuing to develop the technical and environmental studies going into Q2 2025.
And during this period, we will continue to strengthen our bonds with these different stakeholders, which at this point has proven to be clear advocates of a project to be developed by us in the area.
Okay. Okay. That's great. Thank you very much.
Thank you. And as a reminder, if you'd like to ask a question, please press star, then one. We'll pause for just a moment to assemble our roster. And this concludes the question-and-answer session. I'd like to turn the conference back over to Mr. Woodyer for any closing remarks.
Thank you very much, operator. But in particular, thank you to all of you for joining us. We appreciate your interest. And please don't hesitate to reach out to Oliver if you have any further questions. Thank you very much, everybody.
Thank you, sir. This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.