Mineros S.A. (TSX:MSA) - 230k oz/yr Gold Producer with 12% Dividend Yield

Company Interviews

Interview with Andrès Restrepo Isaza, President & CEO of Minero S.A.

Recording date: 6th June 2024

Mineros S.A is a compelling opportunity for investors seeking a unique combination of gold exposure, income, and value. This established Colombian mining company has been in operation for over 50 years but is newly listed on the Toronto Stock Exchange, making it a fresh story for many investors.

With annual production of 230,000 gold ounces from a mix of alluvial mining in Colombia and underground mining in Nicaragua, Mineros has a strong foundation of diversified, low-cost production. The company's Colombian alluvial mine is a steady cash cow, having maintained a 10+ year mine life for the past 50 years. It generates an impressive 48% EBITDA margin from simple gravity-based gold recovery. The Nicaraguan underground mine, which incorporates ore purchasing from artisanal miners, operates at a 35% EBITDA margin with exploration upside on its large land package.

What really sets Mineros apart is its industry-leading dividend. The company has paid a dividend for over 15 years and currently yields around 12%, a rarity in the gold mining sector. This reflects management's unique focus on rewarding shareholders and providing an income component to the investment case. With strong free cash flow generation, Mineros can afford to pay this dividend while still reinvesting in its business.

Mineros' strong financial position also enables a patient, value-driven approach to growth. Rather than pursuing growth at any cost, management intends to seek complimentary acquisitions in stable mining jurisdictions that can add 100-150,000 ounces to annual production and increase the company's scale and liquidity. The company is targeting tier-1 jurisdictions in the Americas, with a particular focus on Canada.

The goal is to reach a production level of 400-500,000 ounces per year, which management believes will attract greater market attention and support a re-rating of the stock. In the meantime, investors can benefit from the current 12% yield and potential upside as the company executes its plans.

Mineros' philosophy and operating approach differentiate it from the typical junior mining company. As President Andre Restrepo explains, "In many ways we're a strange company because we're cautious, we're not in a hurry, we're paying a dividend. We have a dividend yield of 12% so our shareholders can afford to be patient."

The combination of established low-cost production, a double-digit dividend yield, a strong balance sheet, and a disciplined growth strategy makes Mineros a unique investment proposition in the gold mining space. For investors seeking gold exposure with an income component and an attractive valuation, Mineros S.A. is a company to watch.

View Mineros S.A.'s company profile: https://www.cruxinvestor.com/companies/mineros-sa

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