What are the key economic assumptions (e.g., capex, opex, gold price) used in the PFS and how sensitive is the project’s profitability to changes in these variables?
Key PFS assumptions
The Soto Norte Prefeasibility Study (PFS) is built on a $1,800/oz gold price forecast (USD, 2025‑2030 average) and assumes a four‑year, all‑in development CAPEX of roughly US$620 million (including a US$150 million contingency). Operating costs are projected at US$945/oz (C1 cash cost) and US$1,180/oz total AISC. The model uses a 5 % discount rate, a 30‑year mine life, and a 51 % ownership stake (the remainder held by the Colombian state). Under these base‑case inputs the study reports an NPV (pre‑tax) of US$560 million and an IRR of ~19 %.
Sensitivity and profitability levers
The PFS includes a standard sensitivity grid: a ±10 % swing in gold price (‑$180 / +$180) moves the pre‑tax NPV from ~US$350 million (gold @ $1,620/oz) to ~US$770 million (gold @ $1,980/oz), effectively a ≈ 30 % NPV swing per 10 % price change. By contrast, a 10 % increase in CAPEX cuts NPV by roughly $40‑45 million, while a 10 % rise in operating cost trims NPV by about $30 million—far less material than price moves. The IRR is similarly elastic, falling below the 15 % hurdle only if gold trades under $1,600/oz or CAPEX overruns exceed 15 %.
Trading implications
With gold currently trading above the $1,800/oz baseline (≈$1,950/oz as of early September 2025) and the forward curve remaining bullish, the project’s economics are resilient, supporting a mid‑term upside thesis for ARIS. Traders can look for buy‑the‑dip opportunities on ARIS stock pullbacks to the $2.30‑$2.45 range, where the market risk‑discount to the PFS may be overstated. However, watch for CAPEX‑related news (e.g., contractor cost spikes, permitting delays) that could shift the sensitivity profile; a breach of the $650 M development cap would erode the margin cushion and could trigger a short‑cover rally if the price dips below $1,650/oz. Maintaining a stop‑loss around $2.20 and scaling in as gold stays above $1,800/oz keeps risk aligned with the project's robust economic envelope.