Welcome to the Aris Mining 4th quarter 2022 results and exploration update call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the introduction, there will be an opportunity to ask questions. The presentation associated with this call is available on the company's website and may be referred to during the discussion. We note that the slides are not automated and users have control of the deck. I will now turn the call over to Neil Woodyer, Chief Executive Officer.
Thank you, operator, thanks to everybody for joining us today. On the call with me is our Chief Financial Officer, Doug Bowlby, our Chief Operating Officer, Richard Thomas, as well as Pamela De Mark, Senior Vice President for Technical Services, Tyron Breytenbach, Senior Vice President, Capital Markets, and Robert Eckford, Head of Finance. I expect many of you on the call are familiar with the company, for those who aren't, Aris is a growing gold producer focused on Latin America. Following our business combination with GCM Mining last year, we have graduated to be an intermediate gold producer with a strong growth profile. As shown on slide three, we have two producing mines in Colombia, we have two advanced stage assets, one located in Colombia and the other in Guyana.
Last year, our two mines met combined guidance and produced over 235,000 ounces of gold. Looking ahead for this year, we expect to produce between 230,000-270,000 ounces at an all-in sustaining cost of $1,050-$1,150. As you can see, we already have a substantial gold resource base, 15.5 million ounces on a measured and indicated basis, plus 7.8 million ounces of inferred resources, giving us some exceptional leverage to gold prices. Moving to slide four, I just want to highlight our key achievements in the year. Aris Mining has grown quickly since our current team, who created Aris Gold in 2020, assumed management of Aris Mining in September last year.
We're looking forward to building a Latin American producer at a time when sector consolidation is limiting the number of growth-focused companies. Aris Mining combines the operating strengths of the Segovia mine with the exceptional growth of Aris Gold. Segovia continues to provide strong free cash flow to support our growth, most notably at Marmato lower mine, where we will start construction as soon as we receive the updated environmental permits. During Q4, we delivered a pre-feasibility study for the Marmato expansion and increased reserves by 57%. This project is the cornerstone of our near-term growth and results in the country's combined production of over 350,000 ounces by 2026. Post-merger, we started a review of the Toroparu project in Guyana and have just announced an updated resource of 5.4 million ounces, and we are continuing to reevaluate our development plans.
Early in the year, we became joint venture partners with Newmont on the large-scale Soto Norte project in Colombia. We carry in 20% of the project with the option to go to 50%. We are the operators, and we are now taking the project through the permitting stage. Over the last quarter, as I've been spending a lot of time in Colombia, I am extremely enthusiastic about the potential to build a profitable mid-tier Colombian gold company. Our recently launched sustainability webpage shows with a number of engaging videos we are a modern social mining company that knows our success must be accompanied by the most respect for the environment and social commitments. Mining is a historic and important pillar of the Colombian economy. Artisanal and small miners account for the vast majority of the country's gold production.
Aris is building a company that is creating value-based partnerships with artisanal and small miners. This is evidenced by the success of our ASM programs. Today, we have grown to over 66 partnerships, mainly at Segovia, we are now accelerating these and applying them to Marmato and Soto Norte. These agreements are aligned with the Colombian government's focus on formalizing small miners and are the key to building and maintaining a social license in Colombia. Our ASM partners preserve their rights and traditions within protected legal frameworks, together we unlock value, protect the environment, and improve the economies of our local communities. We truly believe in partnerships that combine mining companies' infrastructure, technical abilities, access to capital with small miners' local knowledge and small mining expertise. We believe these are the key to future profitable, sustainable mining in Colombia.
However, the ASM program is just one of the ways Aris is performing on its shared value commitment. We also have other social investment programs, including road maintenance for urban rural connectivity, local procurement programs to promote local economic clusters, strengthening local educational processes, including the La Salada school, tailings recovery programs by transforming tailings storage areas into community parks, and gender diversity and inclusion programs. We're also a new member of the United Nations Global Compact, we'll start our communications on progress reporting in 2023.
We look forward to continuing our growth strategy. At this point, I'll hand over to our CFO, Doug Bowlby, to discuss the operational results in more detail.
Thanks, Neil. We're now looking at slide five for a key summary of the results of the year and the comparison to 2021. Gold sold 220,000 ounces, shows a modest increase over 2021, demonstrating that Segovia is a stable operation. Costs in terms of both cash cost per ounce and all-in sustaining cost per ounce were also in line with 2021, which is a good result considering the cost pressures we're experiencing in the industry. Overall, we generated income from mining operations of $160 million during 2022. Earnings needs a bit of an explanation. In 2022, we experienced some one-time expenditures related to the combination of GCM Mining and Aris Gold. We direct your attention to the adjusted earnings of $50.3 million or $0.46 per share. Adjusted earnings is where we add back several one-time expenditures.
Please see the notes in our MD&A, and these adjustments are clearly set out. It's also worth noting that the 2021 earnings includes a lot of noise related to the transformation of Caldas Gold into Aris Gold, which occurred in February of 2021. This generated non-cash earnings of about $57 million, plus another $50 million of non-cash earnings related to the revaluation of GCM's warrants. Again, we encourage you to compare adjusted earnings on a year-over-year basis. As of December 31st, 2022, we had a significant cash balance of approximately $300 million. Turning to slide six, we take a closer look at our cash flow generation in 2022. We generated $144 million of margin after our all-in sustaining costs, which represents about a 37% margin to revenue.
For 2023, we're focusing on G&A cost reductions, with several initiatives underway related to workforce optimizations, new procurement processes, and new procedures for authorizing expenditures. As Neil previously mentioned, we've closed the GCM office in Toronto. During 2022, we contributed $12 million towards social programs in Colombia. We've made significant royalty and income tax payments to the government as well. As these numbers show, mining is a pillar of the Colombian economy. After adjustments for G&A, working capital, and tax payments, our free cash flow generation was approximately $51 million, which substantially funded approximately $73 million in long-term growth projects in the year. We are well funded for our future projects, with the lower mine at Marmato construction expected to start in 2023.
The lower mine capital estimate, net the $122 million of streaming financing from Wheaton Precious Metals, is well covered by our $300 million of cash and our strong free cash flow generation from Segovia. It's also worth noting that we have an additional $138 million of streaming finance available for Toroparu when we restart construction. I'll now hand over to Richard Thomas, our COO, to talk further about our operations.
Thanks, Doug. Good morning, everyone. I'd like to refer you to slide seven to begin our asset review with Segovia. As Neil mentioned, we hit our production guidance in this asset, and this continues to be our most important mine from a cash flow perspective. Recall that in Q3, we completed the expansion of the Maria Dama process plant, and we upgraded there from 1,500 tonnes a day to 2,000 tonnes a day. Additionally, we shipped our first batch of concentrate from the polymetallic plant, and this contributed approximately $2.2 million in by-product revenue in 2022, which is expected to grow over to over $10 million in 2023. The Segovia operations generated in total $88.6 million in free cash flow from operations over the full year period. A 65% increase over the $53.8 million in 2021.
Moving to slide eight with Marmato Upper Mine, we continue to stabilize and optimize the operations as we address years of underfunding of sustaining capital expenditure. The infrastructure has been systematically upgraded whilst we continue our efforts to improve productivity and, more importantly, safety. We also experienced some impact to short-term production whilst we invested in a mill refurbishment as the site prepares for the lower mine expansion. Marmato Upper Mine produced 25,216 thousand ounces for the year, roughly flat over the prior year. We will continue to implement our optimization efforts in 2023, concentrating on reducing dilution, improving productivity, and the reliability of the processing plant. At Marmato Lower Mine, we're continuing to advance the El Higuerón ventilation decline, with targeted completion in Q3 of this year. We are working closely with our regulator, Corpocaldas, to finalize updates to our environmental management plan.
This is a key permit required to commence construction of the Lower Mine project. Recall that our updated pre-feasibility study outlined a capital construction estimate of $280 million to build a mechanized underground operation and processing facility that is expected to deliver on average a production of 162,000 ounces per year over a nearly 20-year life of mine. It's an all-in sustaining cost at around about $1,000 per ounce. We are very excited to deliver this next phase of growth to the market. The Lower Mine construction capital estimates of $280 million, net of the $122 million of stream financing is about $158 million, which is two years of free cash flow from the Segovia operations. Moving on to slide nine.
In Guyana, the company is completing a reevaluation of the Toroparu asset and has reduced our expenditure as we continue to review and rescope the project. We have just announced a new mineral resource estimate based on a new detailed structural analysis and updated geological model. We are now progressing with additional studies to update, fully define, and optimize the development plan. At this point, we don't know exactly what the Toroparu project will look like, but we are taking a diligent approach and will update the market as we refine our view of this large and advanced asset. I'd also like to briefly recap our main exploration achievements in 2022 and provide an overview of our 2022 exploration plans in slide 10. We are investing aggressively in exploration at our producing assets.
At our largest producer at Segovia, the company has a multi-year history of replacing mined gold with new resources since 2010. We again achieved this goal in 2022. In the year ahead, our focus will be increasing the mineral reserves and the life of mine plan, whilst also targeting strategic high impact new mine exploration targets. Our budget at Segovia for the year is $17.1 million, and we expect to draw 85,000 meters for those $17 million. At Marmato, a highlight for us was the 57% increase in reserves to 3.2 million ounces at 3.2 grams a ton. This also supports the 20-year life of mine.
Our goal for the upcoming years is to optimize the known structures in the near term upper mine. We have budgeted 7,500 meters at a cost for $1.6 million for this purpose. The deck for today's call includes a detailed disclosure of the summary of our exploration targets, which we encourage you all to view following the call. With that, I'd like to hand back the call to Tyrone for some closing remarks.
Thank you, Richard. As we move into Q&A here, I wanted to leave you with slide 12, which really outlines our value drivers in the year ahead and as we continue our best-in-class growth, which I think really sets us apart from our peer group. Richard has to hop for some immediate travel, but the rest of us are still on the call. At this point, I will hand it back to the operator for question time.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Richard Gray with Cormark Securities. Please go ahead.
Thanks. Hey, guys. Just a question on Toroparu. Could you give us a bit more detail just on what changed in the geologic model and what's, you know, what changed in kind of just the whole resource estimation given the decrease we saw?
Rich, I think I'm gonna hand that question over to Pam. She's our SVP, technical. Obviously we've taken a rigorous approach. This is an asset that was new to us, and we went back to first principle. It really started with a review of the block model. Pam, I don't know if you want to provide some more color there for Rich and the listeners.
Sure. Hi, Richard. Nice to see you again. At Toroparu, we engaged a structural geologist who went out to site, reviewed all of the structural data, including the data from oriented drill core. He logged key intersections and spent about two weeks there looking at the drill core and reviewing the available outcrop, and came up with a new structural interpretation based on all of those observations. That structural interpretation was then passed on to Mine+. They have a structural geologist who liaised with our field structural geologist, and they created an updated geological interpretation. That geological interpretation was used to constrain the estimate, and that resulted in the changes that you see there in our news release.
Okay. Thanks for that. Maybe just staying on that, what are the next milestones to expect this year from that asset, if any?
Our next step, at least from a geological point of view and a project assessment point of view, is to conduct a gap analysis. That is to just review the available data and to see what data that we have and what level of study that's at, and just to assess whether everything is at a pre-feasibility study level.
Okay. Thanks for that. Maybe just one more on Marmato. We're kinda mid-March here. You know, how are we looking for receipt of all the permitting you need by, is it kinda mid-year? Is that what we're targeting?
I'm gonna hand that one over to you, Neil.
Okay, we, in late December, we got from our authority about 300 questions. We've answered all those questions at the end of February. It should be a three-month process before we get the approval to do it. Sometime mid-year, June, July, we would expect to be underway. Okay, thanks. We're looking forward to that. That's all. That's it for me. Thanks.
Your next question comes from John DeMarco with National Bank Financial. Please go ahead.
Thank you, operator. Good morning, team. First off, maybe start with Segovia costs. You know, some impressive costs here relative to peers. Can you just talk about some of the factors that support those costs at Segovia and why they're not up year-over-year while many are?
I think, Doug and Rob, do you guys wanna take control of that, seeing as Richard had to run?
We're happy to. I think one of the key benefits we've had is the devaluation of the Colombian pesos during the year. That helped us with our cost structure. Of course, Segovia also really benefits from its very high grade.
Okay. That's helpful. maybe just another question then on Marmato Lower, the permitting that's going on there. Could you just give a little bit of color on the permitting tasks that are in progress right now? Subsequent to a successful permitting outcome, what the sequence of events would be leading up to construction and first production out of Marmato Lower?
From the point of view of permitting, we've had the PTO approved already, so we're now just on the environmental side. We have submitted during the course of last year, all the environmental support. It went through a very rigorous backwards and forwards with. Thank you.
Your next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Perhaps I could just start with Segovia. You had these crusher issues in December, where you were down around 1,400 ton a day from your 2,000 ton a day run rate. Has that problem been sorted out with the crushers as of year-end, or did that issue linger into 2023?
That issue is lingering into 2023. We should be through it by about another month. Roughly. We've been able to keep our production up and above last year's levels. We're not where we should be. The fire damage is waiting for some extra spares to come in, so it should be just a few weeks before we're back to where we were. Where we should be, 2,000 tons.
Okay. For Q1 then, you know, what would be the rough average throughput that maybe think about then? Would it be around this 1,400 tons a day then for Q1, and then in Q2 it'll be a step change?
I would hope it's slightly higher than that.
Okay. Okay. Okay. Then for Toroparu, just in 2023, what would the total expenditure likely be on that project for the work that you've got planned? You spent, you know, $60 million last year. I'm assuming this year is going to be significantly less than that. Could you give me some rough ideas to how much you might spend this year?
We've got current run rates with our studies of 200,000-300,000 a month. Studies could cost us $5 million-$8 million on top of that, depending how far we go down. We need to go down the study route as Ben said. We're doing the gap analysis now to determine that.
Okay. Okay. Less than $10 million total then, if I understand you correctly. Is that right?
I would hope so, but order of magnitude, not far off, I don't think. It's difficult to determine till we know the study level we need to do.
Okay. Okay. In 2023, would the contribution at Segovia from the small miners in terms of tons be roughly similar to what you did in 2022, the 109,000 tons? Is that kind of the run rate that you're looking at these days?
We've already just signed on a new group of about 250 miners. And we're looking at other groups. I would say it's gonna be at least that and hope it's gonna be higher.
Okay. Okay. The last thing we didn't talk much about Soto Norte, but how are things progressing with your TSR efforts? I think you were suggesting that you'll submit the EIS in the back half of this year. Maybe if you could just give us an update on how that project is?
Yeah. Okay. From the actual preparation of the EIS, we're doing well. We're on schedule. We will certainly be putting it in the last part, the last half of the year sometime. I think it depends on, you know, where the politics and where the whole thing is at that stage. Technically, we should have it ready in the third quarter to be submitted. That's going well. That will include some redesign where we've done some additional planning to do grouting and that sort of thing. We've done additional drilling on the dry stack. All that comes together from the technical side and the environmental side, and it's coming together very well.
The other area where we've been developing very much is on the social communication side, where we've had the Universidad Ean helping us communicate in the various areas. We're also doing a lot of study work on the water effects to show that we do not in any way damage the water flow into Bucaramanga. That sort of side is going on very well. We are developing Calimanero small miners. We are going through that process now. We are doing some additional drilling or some unique start up drilling just to ensure that the sort of grade is where we think it will be. We would hope to get Calimanero started sometime later in this year.
As there's no facility there at the moment, we will take the material to Segovia to be treated. That will do a great deal of benefit in the local community and the local miners. We're looking to see how we can expand the small miner program in that area. We're doing all those things and pushing ahead with the communications. We've also started a lot of farmers markets from a social point of view. Our social planning is going well. Our social communication is going well. We just have to wait to get the EIA finished and submitted at the right time.
Okay. Okay. Just so I'm clear, what were the exact issues with the crusher at Segovia? What was the problem?
They were repairing a belt with torches, and they burnt it. Very simple. Hot metal fell onto it, and it caught fire. Very bad controlled maintenance.
Oh, okay. Are you just
Nothing highly technical. Nothing highly technical at all.
Right. It just it's taking time to get replacement components for the fire damage. Is that what's causing the delay?
Yes. We.
I mean.
The real mistake is we didn't have spares.
Okay.
It could have been fast change out had we had all the replacement parts we needed. Our spare level was down. That's the real mistake. Accidents happen. They shouldn't, but they do. We should have had the spares.
Right. Right. Okay. Last question from me, Neil. You don't have any hedging in place now, at least as of year-end. Do you have any hedging plans for 2023 then, either for the base metals or gold and silver?
No.
these even?
No. We don't need to hedge for any financial reason from any lender or anything like that. We do not conceptually believe in hedging as an ongoing element of our business. We think the shareholders should participate in any price rise there is. We're not concerned about a, you know, downturn in the gold price or anything like that. No, we have no current intention to hedge.
Okay. Okay. That's great. Thank you for the update. Appreciate it.
Kerry, just on your mill throughput question, the mill did run at over 1,800 tons a day towards the end of Feb. It looks like it's picking up already.
Sorry, 1,800 tons a day at the end of February, you said, Tyrone?
Correct.
Okay. Gotcha. Okay. Okay. Okay, perfect. Thank you.
There are no further questions at this time. I will now turn the call over to Tyron Breytenbach. Please go ahead.
Thank you, operator, and thank you to everyone for dialing in today. We're very excited about the year ahead. Looks like we finally have a gold market here. We put out a lot of information over the last 24 hours. I'm sure there'll be some follow-up questions. Please reach out to the company in the days ahead. Thanks again for the time during a busy earnings season.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.