Dividend Paying Gold Producer Has Record Year, But Better in 2026 From 100,000m Drilling Program

• Mineros SA produced 227,000 ounces of gold equivalent in 2025, generating $800 million in revenues (50% increase year-over-year) and $360 million in adjusted EBITDA at an average realised price of $3,500 per ounce
• Operating two producing mines - Hemco in Nicaragua (~140,000 oz annually) and Colombia (~90,000 oz annually) - plus an advanced exploration project in northern Chile, with combined production exceeding 100-year operating history
• Investing in 40% throughput expansion at Hemco plant (from 1,800 to 2,500 tons per day) while maintaining dividend payments; company has returned $145 million to shareholders over past five years
• Launching company's largest-ever drilling program of 100 kilometers across 450,000-hectare Nicaragua land package, focusing on high-grade brownfield opportunities and greenfield discoveries in historically underexplored district
• Despite 1,000% stock appreciation over two years, company trades at 2x revenues and 4x EBITDA based on $3,500 gold, presenting compelling upside with current $5,000 gold price environment

In a gold market characterised by $5,000 per ounce pricing and renewed investor appetite for precious metals producers, Mineros SA (TSX:MSA) represents an unusual investment opportunity: a company with over a century of operational history that is simultaneously executing a fundamental transformation. The Colombian-based producer operates assets in Latin America that have collectively produced gold for more than 100 years, yet the company is positioning itself as a growth story through operational improvements, capital expansion, and aggressive exploration. This combination of operational stability and growth potential, trading at what management considers significant discount to peers, merits examination by investors seeking exposure to high-margin gold production.

Transformational 2025 Results Set Foundation for Growth

Mineros SA delivered exceptional operational and financial results in 2025, exceeding production guidance with 227,000 ounces of gold equivalent. The company generated $800 million in revenues, representing a 50% increase over 2024 performance, benefiting from both increased production volumes and favorable gold pricing. At an average realised price of approximately $3,500 per ounce, the company produced $360 million in adjusted EBITDA - effectively generating nearly one million dollars for every day of operations.

CEO Daniel Henao characterised 2025 as "a transformational year for Mineros," citing the influence of Sun Valley Investments, which began investing in 2024 and has been driving strategic changes across management, technical operations, and corporate vision. The company's operational improvements translated directly to shareholder returns, with the stock appreciating 1,000% over the preceding two years while simultaneously maintaining its dividend tradition.

Dual-Asset Production Platform with Distinct Characteristics

Mineros operates two primary producing assets with distinctly different operational profiles. Hemco in Nicaragua represents the larger operation, producing approximately 140,000 ounces of gold annually from the historically significant Bonanza mining district. Colombia produces approximately 90,000 ounces annually through an unusual alluvial mining operation that has been in continuous production for over a century.

The Colombian operation deserves particular attention given its unconventional nature. Rather than traditional open-pit mining with haul trucks, Mineros employs a flooded pit methodology adjacent to a river. The company drills to the north in a predictable geological environment that is fully 43-101 compliant with technical studies completed by SLR. Material is extracted either through pumping or bucket dredges, with gold recovered through entirely gravimetric processes without chemicals. The operation is powered by the company's own hydroelectric facilities, and for every hectare disturbed by mining, the company compensates with 7-10 hectares of environmental offset. This asset currently maintains a 12-year life of mine with an additional one million ounces in resources.

Nicaragua, however, represents the primary focus for near-term growth initiatives. As Henao explained: 

"The main constraint that we have in Nicaragua is actually processing capacity. The problem there is not lack of gold, or lack of minerals. There's abundance of gold and abundance of minerals. But the company does not currently have the infrastructure to process those tons."

Capital Expansion & Operational Improvements Drive Margin Enhancement

The company has committed to expanding processing capacity at Hemco from 1,800 tons per day to 2,500 tons per day - a 40% throughput increase. This expansion is already underway, with the plant currently processing approximately 2,000 tons per day in early 2026, with the full 2,500 ton-per-day capacity expected by year-end. Engineering work is proceeding for potential further expansion beyond this initial phase.

Beyond volume increases, Mineros is capturing margin improvements through enhanced recovery rates. Gold recoveries at Hemco have improved from 87% to 90%, representing incremental ounces from ore that has already been mined and processed - gains that flow directly to the bottom line without additional capital requirements. The company is also implementing initiatives to improve feed grades through optimised mine planning, dilution control, and incentive programs for its Bonanza mining partners who deliver high-grade material often denominated in hundreds of grams per ton.

These improvements require what Henao characterised as "brains allocation" as much as capital allocation, representing the impact of new technical management and operational discipline rather than purely capital-intensive initiatives.

Interview with Daniel Henao, President & CEO of Mineros SA

Exploration as Growth Catalyst in Underexplored District

Mineros controls a 450,000-hectare land package in Nicaragua's historic Bonanza mining district, also known as the Nicaragua golden triangle. This district has produced nearly 10 million ounces of gold along with significant silver, copper, and zinc, yet remains substantially underexplored by modern standards. The company is launching its largest-ever drilling program, targeting 100 kilometers across eight company-owned drill rigs, enabling low-cost exploration.

The exploration program includes both brownfield opportunities near existing operations and greenfield targets across the district. Carlos Rios, who previously led exploration efforts at Collective Mining and Continental Gold with notable success, joined Mineros in December 2025 to lead the Nicaragua exploration program. The company is leveraging intelligence from its network of Bonanza mining partners, who operate small-scale mines across the concession area and frequently encounter high-grade mineralisation that provides geological vectors for larger-scale exploration targets.

"For the first time ever, we're investing in greenfield opportunities as well.", Henao noted, indicating a departure from the company's historically conservative approach to exploration spending.

Capital Allocation: Balancing Dividends, Growth and M&A Optionality

Mineros has established a track record as a dividend payer, particularly valued in its Colombian home market, having returned $145 million to shareholders through dividends and buybacks over the past five years. Management emphasises the company's ability to maintain dividends while simultaneously funding growth capital and exploration.

At current gold prices of $5,000 per ounce - significantly above the $3,500 price at which 2025 results were generated - the company projects substantial excess cash flow generation. Henao stated: 

"We're generating a ton of cash flow. 2025 was a record year for the company. That was at $3,500 gold price. We are now at $5,000 gold price. So things are looking great. We can continue returning capital to our shareholders and we can invest in our business."

The company also maintains active M&A evaluation processes while emphasising discipline. Management indicated it will not pursue growth for growth's sake and will carefully manage per-share metrics, acknowledging the challenging M&A environment for gold producers. With sufficient organic opportunities across three jurisdictions, the company can afford selectivity in external growth opportunities.

Operating & Jurisdictional Considerations

Nicaragua's political environment warrants consideration given the country's reputation as challenging for western mining companies. Mineros has operated in Nicaragua for 12 years, maintaining what management describes as a peaceful and productive relationship with government authorities. The company's operations in the northern region of the country place it relatively distant from the capital Managua and day-to-day political dynamics.

Management emphasises community investment, local employment, and tax compliance as foundations for its social license to operate. The infrastructure and workforce are well-established, and community support remains strong. This operational stability in Nicaragua contrasts with challenges some international mining companies have faced in the jurisdiction.

Valuation Perspective

Despite the 1,000% stock appreciation over two years, management argues the company remains undervalued relative to both its production profile and peer group. At $1.5 billion market capitalisation, Mineros trades at approximately 2x revenues and 4x EBITDA - multiples based on $3,500 gold pricing rather than current $5,000 levels. The company achieved inclusion in the S&P/TSX Global Mining Index and MSCI small cap index in 2025, though it has not yet achieved GDXJ inclusion, suggesting potential for incremental index-driven demand.

The company characterizes itself as "a very old company but a brand new opportunity," emphasising the transformation occurring under new strategic direction while leveraging assets with century-plus operating histories. With production growth from plant expansion, margin improvements from operational enhancements, exploration upside from substantial drilling programs, and continued dividend payments, management believes significant rerating potential remains despite recent stock performance.

The Investment Thesis for Mineros SA

• Leverage to Gold Price: With 2025 EBITDA of $360 million generated at $3,500/oz gold and current prices at $5,000/oz, the company offers substantial operating leverage to precious metals pricing without execution risk from new mine development
• Near-Term Production Growth: 40% throughput expansion at Hemco (1,800 to 2,500 tpd) provides visible production growth through 2026 while recovery improvements from 87% to 90% represent pure margin enhancement from already-mined material
• Exploration Optionality in Underexplored District: 450,000-hectare land package in historically productive Nicaragua golden triangle (10 million oz produced) remains largely unexplored by modern methods, with 100km drilling program targeting both brownfield expansion and greenfield discovery
• Cash Generation Supports Dividends and Growth: Strong free cash flow enables simultaneous dividend maintenance ($145 million returned over five years), organic growth capital, and M&A optionality without balance sheet stress
• Valuation Discount to Peers: Trading at 2x revenues and 4x EBITDA (based on $3,500 gold) despite peer group trading at higher multiples; recent inclusion in S&P/TSX Global Mining Index with GDXJ inclusion potential provides technical upside
• Operational Stability with Century-Plus Track Record: Assets with >100-year production history in Colombia and Nicaragua provide operational reliability and de-risk execution, while new management drives transformation and growth initiatives
• Jurisdictional Diversification: Three-asset portfolio across Nicaragua, Colombia, and Chile (development) provides geographic diversification within Latin America mining-friendly jurisdictions

The precious metals sector is experiencing a structural repricing driven by monetary policy uncertainty, geopolitical tensions, and persistent inflation concerns that have propelled gold to $5,000 per ounce. This environment disproportionately benefits established producers with operating leverage to spot prices, as opposed to developers facing capital cost inflation. Mineros represents a particularly compelling macro play because its 2025 financial performance - $800 million in revenues and $360 million in EBITDA - was generated at $3,500 gold, providing immediate margin expansion at current prices without requiring operational improvements. 

The company's Latin American jurisdiction focus aligns with broader industry trends toward nearshoring and Western Hemisphere development, while its century-plus operational history de-risks execution relative to peers developing greenfield assets in this capital-constrained environment.

TL;DR: Executive Summary

Mineros SA generated record 2025 results with $800 million in revenues and $360 million in EBITDA at $3,500 gold, yet trades at 2x revenues and 4x EBITDA despite current $5,000 gold prices. The company is executing 40% throughput expansion in Nicaragua while launching its largest-ever 100km drilling program across a substantially underexplored 450,000-hectare land package. With century-plus operational history, maintained dividend payments, and significant operating leverage to current gold prices, management believes substantial rerating opportunity remains despite 1,000% stock appreciation over the past two years.

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