Mineros S.A. - The 230k oz/yr Gold Producer with 12% Dividend Yield

• Mineros S.A. is a gold mining company with over 50 years of experience with 3 years of public trading on the Toronto Stock Exchange
• The company produces 230,000 oz gold annually from alluvial mining in Colombia and underground mining in Nicaragua, with 50% of Nicaraguan production coming from artisanal miners partnerships
• Mineros' Colombian alluvial mine is highly efficient and profitable, with 48% EBITDA margins and a 10+ year mine life. Nicaraguan underground mine has 35% EBITDA margins.
• MSA pays a 12% dividend yield and has paid dividends for over 15 years. Focused on steady operations and shareholder returns rather than high growth.
• Mineros S.A looks to grow to 400-500k oz/year through acquisitions in tier-1 jurisdictions like Canada to improve market liquidity and valuation. Strong cash flows enable a patient approach.

Striking Gold with a 12% Dividend Yield

Mineros S.A. is a unique gold mining opportunity for investors seeking exposure to a steady, dividend-paying producer with a long operating history and strong cash flows. Despite being in business for over 50 years, the company only went public on the Toronto Stock Exchange three years ago, making it a relatively unknown story to many mining investors.

With consistent production of 230,000 ounces of gold annually from operations in Colombia and Nicaragua, a 12% dividend yield, and a cautious approach to growth, Mineros presents a compelling opportunity for yield-focused investors.

Interview with President & CEO Andrés Restrepo Isaza

Colombian Alluvial Mining: A Steady Cash Cow

The core of Mineros' business is an alluvial gold mining operation in Colombia that has been in production for over 100 years. Unlike the informal, environmentally destructive alluvial mining seen in many parts of the developing world, Mineros runs its Colombian mine like a modern open pit operation. The alluvial ore is drilled and modeled to provide a consistent 10-year mine plan.

"The Colombian operation is so profitable we're not ready to give it up to please people," notes Restrepo, referring to the mine's 48% EBITDA margins driven by the simple gravity-based gold recovery process requiring no complex metallurgy or chemicals. "Colombia is going to be the cash cow, to be honest," he explains.

The unique deposit has consistently maintained a 10-year mine life for the past 50 years as new reserves are defined. Mineros moves around 30 million cubic meters of alluvium annually, slowly progressing a few kilometers north each year in a steady, snail-like fashion. The environmental impacts are carefully managed, with progressive rehabilitation and reforestation of mined-out areas. The consistent production and restrained pace enable Mineros to focus on gradual operational improvements rather than high growth.

Hybrid Nicaraguan Underground Mining

In contrast to the alluvial mining in Colombia, Mineros' Nicaraguan operations center on an underground gold mine expanded from 56,000 to 130,000 ounces per year after Mineros acquired it. Unique to this asset, 50% of the mill feed comes from artisanal miners operating on Mineros' land package, which Nicaraguan law allows.

Rather than fighting the artisanal miners, Mineros has embraced them, organizing them into cooperatives and providing ore purchasing and profit-sharing arrangements that benefit both parties. While unorthodox, this structure provides a win-win situation, where the artisanal miners benefit from better gold recoveries and a more stable livelihood than they'd achieve on their own.

The Nicaraguan operations have a 35% EBITDA margin, providing meaningful growth potential from the large 150,000 hectare land package. Only a small portion has been explored thus far.

"In Nicaragua, we have room to grow because we have 150,000 hectares of land package, and we only started to explore that", explains Restrepo Isaza.

Prioritizing Shareholder Returns

What sets Mineros apart from many junior gold producers is its strong dividend. The company has paid a dividend for over 15 years and currently yields around 12%. In an industry often focused on growth at all costs, Mineros' prioritization of investor returns is a differentiator.

"We have shareholders that have been with us for 15 years. We don't want to dilute them too fast, and we don't want to stop caring for them," emphasizes Restrepo Isaza. "In many ways, we're a strange company because we're cautious, we're not in a hurry, we're paying dividends, we have a dividend yield of 12%, so our shareholders can afford to be patient."

The company's strong free cash flow generation enables patience and caution. Mineros' original motivation for going public was to improve its valuation by shifting to a more liquid market. "We were at the Colombian Stock Exchange, and it's a very dry market, and our price suffered, so there is a lot of value locked there for our shareholders. We wanted to unlock that value; that was the reason to come to Toronto," explains Restrepo Isaza.

Outlook & Growth Strategy

While content with its current operations, Mineros does see value in increasing its scale and market presence.

"To get a re-rating in Toronto, we think we need to grow to between 400 and 500,000 ounces of gold, and we need to have more liquidity, and we have to build a story and get trust from investors," outlines Restrepo Isaza.

The company aims to reach this goal through acquisitions of producing assets or near-production development projects capable of adding 100-150,000 ounces to the company's production profile. The focus is on tier-1 jurisdictions in the Americas time zone, with a particular interest in Canada.

With strong cash flows, Mineros can be patient and selective with its growth initiatives.

"We want to do it carefully because we have to care for our shareholders. We have shareholders that have been with us for 15 years. We don't want to dilute them too fast, and we don't want to stop caring for them".

Mineros S.A. offers a unique and compelling opportunity for mining investors. The company's long-life, steady production, and focus on shareholder returns differentiate it from the typical high-growth, high-risk junior miner. With 230,000 ounces of low-cost production, a 12% dividend yield, and a patient, value-driven growth strategy, Mineros provides an attractive way to gain gold exposure while earning a yield well in excess of most dividend-paying gold miners. Investors stand to benefit as the company gains market attention and executes its plans.

The Investment Thesis for Mineros S.A.

• Stable 230,000 oz annual gold production from long-life Colombian alluvial and Nicaraguan underground mines
• Industry-leading 48% EBITDA margins and 12% dividend yield provide strong shareholder returns
• Excellent cash flow generation and no need to access capital markets enables patient, value-focused growth strategy
• Attractive valuation with potential re-rating as production grows to 400-500k oz/year and market liquidity improves
• Target acquisitions in tier-1 jurisdictions like Canada to increase scale and investor interest

Macro Thematic Analysis

Mineros S.A. aligns with several attractive macro-investing themes. With global financial uncertainty and accommodative monetary policies, gold continues to be valued as a safe haven asset, portfolio diversifier, and hedge against fiat currency depreciation. Mineros' established gold production and potential for further growth position it well amidst this backdrop.

The company's dividend also shines in the current low interest rate environment where yield is scarce. For investors seeking income, a 12% yield is difficult to find, especially from a company that has consistently paid dividends for over 15 years through multiple gold cycles.

As Restrepo Isaza sums it up, "Definitely, we want to grow. We have a project in Nicaragua that will bring us around 300,000 ounces; the rest must be inorganic. We're looking for a tier-1 jurisdiction, hopefully in this time zone. We're looking at North America, Canada... We're interested in buying projects or companies in production or close to production that will incorporate 100 or 150,000 ounces additional to our current production and our potential growth. So that's the upside for Mineros."

From a mining industry perspective, Mineros shows that responsible, steady production can generate more value than high-risk growth. The company's cautious philosophy and focus on shareholder returns align with the conservative approach many mining investors seek after multiple cycles of value-destructive acquisitions and aggressive expansions.