Everyone wants to know where the price of gold is headed, right? Gold has risen over 100% in these last few months, and Rodrigo is the CEO of Aura Minerals, which is perhaps the largest gold mining company in Latin America. And what's cool is that we worked on Aura's IPO back in 2020, in the middle of the pandemic, and it wasn't an easy operation, was it? Because the capital market took a while to understand the gold sector; it was the first gold mining company to go public in Brazil, right? So, a dual listing, right? Canada and here. But first, I wanted to talk a little about you because during the pandemic, you're also a DJ father, right? You used to do some livestreams as a DJ. And I wanted you, Rodrigo, to tell us briefly a little about yourself, a little about Aura, but at the end, we'll talk about where the price of gold is going. It's the million-dollar question, right? Or a million-gold-bar question, like the legendary Silvio Santos.
Thanks for the opportunity to be here. I'm here. Right? So, I've been at Aura for 8 years now; I'm an engineer with a degree in the United States as well, and I ended up specializing quite a bit in doing turnarounds. And at Aura, what is a turnaround? It's taking a company that's doing poorly and making it do well. It's exactly about restructuring companies, right? When I joined, Aura wasn't a very indebted company, but it was growing without a concrete growth plan and firmer management. So, since 2017, we've been driving a major transformation in the company. With the initial results, we did the IPO, right? We felt, 'Okay, now is the time to retell this story, let's do the IPO.' Because Aura was a company that was listed on the Canadian stock exchange, sort of abandoned.
It was abandoned. Yeah. And then you guys bought it, right, my friend Paulo Brito,
his family bought it, and you restructured and sort of reopened the company's capital, right?
So then we did that IPO in 2020, with a very consistent story of growing and paying dividends, which is a unique combination. And now we have the good fortune of executing projects while the price of gold is appreciating.
Today, when you compare gold mining and iron ore mining technologies, are they similar? Like, big structures, big plants, big investments?
Yeah, they're quite different. I don't think the public has ever seen a gold mine in operation, right? Yeah, the scale of gold mining is much smaller than iron ore, you know? On the other hand, the sophistication of knowledge required—knowing where the gold is, its quality, and how to process it in the plant—is much greater.
And how do you transport gold? Is it true that after mining, sometimes they even take it by helicopter to avoid the risk of theft and things like that?
Yeah, it's mostly a matter of logistics costs, really. Because the product's added value is so high, that air transport is worth it. Since we export the product, right? Gold goes to international airports and is then exported to refineries, usually in Switzerland or the United States. And the logistics cost isn't even 1% of the total.
I see. So, to save time, you transport most of it by air. Comparing it just a little, going back to iron ore so we understand the added value of gold, one ton of iron ore is around $60, right? 31 grams of gold today, which is an ounce, is at 3,300. So it's better to mine gold, then, right?
When you find it, sure. But it's hard to find and much more difficult.
Brazil has a lot of gold. How many mines? Aura doesn't just have mines in Brazil, but in other countries too. How many gold mines are there in Brazil and abroad? And...
We have three gold mines. There are many gold mines out there that no one knows exist. There are quite a few, and it's very spread out, you know? Gold mining happens all over the world, but it's very difficult to find. It's not like iron ore, where you have specific regions like Carajás or Africa, which have areas specifically for iron, highly concentrated. Gold is different; it occurs a little bit here and there, it can be anywhere, right?
So the cost is higher because you don't have the economies of scale like in a Carajás or a Casa de Pedra.
Yeah. And it's different. Yeah. And it's very difficult to find and discover a new gold mine. With iron ore, it's there; it's spread out.
How do you discover a gold mine these days? Is there a lot of technology involved, or is it still that guy out there prospecting? Believe it or not, right?
Yeah, even though I really like technology and I'm pushing hard for us to bring in more, if you look at the world, 80 to 90% of gold mines were discovered by the Portuguese, the Spanish, or by prospectors. The guy goes there, finds a vein, and hits the jackpot.
Yeah, he follows the river, right?
Because gold deposits are usually underground, but with millions of years of erosion, the water flows and carries it down to the river. So he finds gold in the river, then follows it upstream, heading up until he finds the actual deposit, right?
That's interesting. There must be some good stories there, right? About gold. Now, since then, tell me how many gold mines you have in production, because I remember when we went public, there was a story about injecting capital into the company to increase production. Did you deliver on that?
Yes, back in 2020, during our IPO, the strategy was to generate value through three variables. Number one, it was to build and increase our production, which was at 200,000 ounces, to reach 400,000. Two was to increase the amount of gold we know exists near our mines. So, we are already sure that some mines have 10 or 12 years of production, others six, and we said we would increase that. And three, we would keep growing through M&A, acquisitions, buying plants with that same mindset, buying some plants that aren't well-managed, where you bring in your technology and manage to improve them.
Yes. Or something where the mine was discovered, but they couldn't afford to invest the capital.
Ah, that's true. Sometimes a guy discovers it, but doesn't have the money to invest.
Give me an idea, how much do you spend to start properly exploring a gold deposit?
Well, our business isn't to discover new gold mines, we like to get involved when something is already well-discovered, right? They are different risk profiles, investment profiles, and knowledge sets.
The guy found it, he's slightly exploring it, he needs a professional guy with capital like you. How much do you spend to take something that's already there at the beginning to put it into production? To discover a gold mine, it can vary, but could it reach a thousand? No, not to discover it. He's already discovered it, but he needs a guy like you to invest. So when it comes to investing, what size is the check? 200, 300 million dollars?
So, 1 billion reais to get the business up and running.
It's the scale we operate at, right? It's a billion reais, which is what we just invested in Borborema, in Rio Grande do Norte.
In Rio Grande do Norte, you invested 1 billion reais. Nice. Nice. That's a lot of money. So, a company that is listed on the stock exchange has access to capital, which is a major advantage for consolidating this market and growing even more. Yeah. So, how many mines do you have in Brazil today?
We have three mines in Brazil,
One in Mato Grosso, one in Tocantins, and this third one now here in Rio Grande do Norte.
And how many kilos of gold do you extract, right? You talk about ounces, but I don't understand ounces. Yeah. How many kilos is an ounce? How does that work?
Think of it as 31 grams. One ounce is 31 grams.
So 270,000 ounces, which is what we produced last year, is close to 7,000 kg.
