Aura Minerals (AUGO) Earnings

Management highlights

- Financial and Capital Return Highlights - 12 consecutive quarters of increasing trailing 12-month adjusted EBITDA, with TTM EBITDA reaching $800 million on TTM production of 313,000 gold ounces. - H1 2026 total production was 158,000 ounces; recurring operating cash flow (excluding gold hedge losses) reached ~$120 million in Q2, covering $54 million in expansion CapEx and $68 million in combined dividends and share buybacks. - A new $60 million dividend ($0.72 per share) was declared for Q2 2026, alongside a new $200 million share buyback program; going forward, shareholder remuneration will be split between dividends and buybacks. - Leverage remains stable at 0.2x net debt to EBITDA, leaving significant financial capacity for growth projects and acquisitions. - Average daily trading volume on the NASDAQ listing increased to ~$100 million per quarter, up from $1-2 million per day one year prior. - Operational Project Milestones - MSG turnaround: Proven and probable reserves have doubled to 753,000 ounces from 370,000 ounces in six months post-acquisition, with indicated/inferred resources also increasing substantially. Underground development productivity is 80-90% higher than 2025 levels, with fleet and infrastructure upgrades complete, positioning the mine for 80,000 ounces per year production at ~$2,000-$2,200 per ounce all-in sustaining cash cost by 2027. - Era Dorada (Guatemala) project: 60% of pre-construction groundwork is complete, with $15 million invested to date; the project includes improved potable water treatment for local communities and a planned geothermal renewable energy supply. 53% of employees are hired from the local Asuncion Mita region, and 93% are Guatemalan nationals, with majority community COCODE approval for the project. - Borborema: Planned plant debottlenecking will increase capacity by Q4 2026, with higher grades expected in H2 2026 to drive higher production. - The sale of the non-core San Francisco mine was completed in Q2, generating a net gain for the quarter. - Safety and ESG - One lost-time incident occurred at Borborema in March 2026; the employee has fully recovered. All operational safety procedures have been reviewed across the company, with a continued target of zero lost-time incidents. All geotechnical structures (tailings, pits, pads) are monitored regularly by external consultants and remain within satisfactory safety levels.

Guidance

- Full-year 2026 total production guidance is maintained at 340,000 to 390,000 gold ounces, with 182,000 to 232,000 ounces targeted for H2 2026. Management expects full-year results to land near the middle, not the lower end, of the guidance range. - MSG Q3 and Q4 2026 production will increase quarter-over-quarter, with 50-60% higher throughput and 25-35% higher average grades in H2 compared to H1 2026, as lower-grade surface stockpiles are replaced by higher-grade underground ore. The long-term target of 80,000 ounces per year at ~$2,000-$2,200 per ounce AISC by 2027 remains on track. - Full-year 2026 all-in sustaining cash cost guidance is maintained. Management notes that despite FX headwinds (BRL strengthening 10% against USD from guidance issuance) and higher diesel prices, internal cost mitigation initiatives will keep full-year costs within the original guidance range. Q2 2026 AISC was ~$2,000 per ounce, or ~$1,600 per ounce excluding MSG turnaround costs, with AISC expected to decline in H2 2026. 2027 guidance has not yet been finalized, as the annual budgeting process is just starting. Management expects structural AISC downside from MSG reaching full production and Almas capacity expansion.

Segment performance

Aura Minerals reports six producing mines as core operating segments, with Q2 2026 aggregate net revenue of $336 million, adjusted EBITDA of $197 million, and net income of $218 million (including a $126 million noncash unrealized gain from gold derivative marking-to-market). Four segments delivered strong adjusted EBITDA results in the $43 million to $56 million range: Superiore, Minosa, Almas, and Araxa. Minosa production decreased from 17,000 ounces in Q1 to 14,000 ounces in Q2 due to slower recovery from higher stacking on its leach pad. Almas saw slight production improvement, with ongoing expansion of plant capacity from 2 million tonnes per year to 3 million tonnes per year, on track to finish by end-2026. Borborema production decreased from 17,000 ounces in Q1 to 14,000 ounces in Q2 due to planned mine sequencing for lower grades; plant debottlenecking (new filter installation) will be complete by Q4 2026 to support higher output. Apoena production decreased from 7,000 ounces in Q1 to 6,000 ounces in Q2, with all planned pre-production development on track to support higher grades and output in H2 2026. MSG (the acquired turnaround asset) produced 9,000 ounces in Q1 and had weaker Q2 output, as short-term production was prioritized for underground development and infrastructure upgrades in preparation for long-term higher output. Aranzazu also had lower grades in H1 2026, with higher grades planned for H2 2026.

Risks & headwinds

- Lower production in H1 2026, particularly at MSG, was worse than initially planned, and MSG may land at the lower end of its 2026 production guidance, creating near-term downside risk to overall annual output. - Macroeconomic risks include exchange rate volatility in Brazil and Mexico, rising global oil and diesel prices, and broader cost inflation that could pressure operating margins if mitigation efforts are not fully effective. - Geopolitical conflict (U.S.-Iran tensions) could further increase energy costs, though management has not observed material impacts to date. - The El Nino weather pattern could bring excess rainfall to Central America, potentially impacting open pit productivity at the Honduras operation and causing minor construction delays at Era Dorada, though no material impact to full-year results is expected. - The Tafria asset in Colombia faces licensing uncertainty following a recent change in national government; management is monitoring regulatory changes to decide whether to pursue development, continue care and maintenance, or pursue a sale. - Share price volatility is higher than peer gold producers due to Aura's high growth profile, with a large share of net asset value tied to future production growth that is more sensitive to gold price movements.

Analyst Q&A

• Q: How does current volatile macro and lower gold price change your M&A appetite, and how do you balance capital allocation between growth CapEx, dividends, and the new $200M share buyback? /

  A: Management has not changed its M&A appetite; lower current gold prices have actually narrowed the gap between buyer and seller price expectations, making transactions more feasible than when gold prices spiked previously. Aura’s three core value creation priorities are: execution on existing greenfield/brownfield projects, expanding organic reserves/resources, and growth through M&A to reach 1 million ounces annual production (a size that typically commands a higher NAV multiple). The company’s high project payback (1-2 years) and low leverage (0.2x net debt/EBITDA) allow it to simultaneously fund growth, pay strong dividends, and repurchase shares without tradeoffs. Recurring operating cash flow alone covers all current expansion and shareholder returns.

• Q: For MSG, what key bottlenecks are being addressed during the turnaround, how will production/grades evolve, and is there risk to full-year guidance? /

  A: The core bottleneck is developing underground access to higher-grade reserves to transition the mine from top-down to bottom-up operation. Short-term production was intentionally deprioritized to prioritize infrastructure, fleet upgrades, and underground development, which increased productivity 8-9% over 2025 levels. Production and grades will increase quarter-over-quarter from Q2 through 2027, with H2 2026 throughput expected to be 50-60% higher and average grades 25-35% higher than H1. MSG may end 2026 at the lower end of guidance, but all long-term targets (80,000 annual ounces at ~$2,000/oz AISC by 2027) remain on track.

• Q: What is the rationale for the new share buyback program instead of increasing dividends further, and will you seek to sell the Tafria asset in Colombia similarly to the sold San Francisco mine? /

  A: Going forward, shareholder remuneration will be split between dividends and buybacks; total annual remuneration will not increase beyond current levels, but will shift to a mix rather than all dividends. Buybacks will only be executed as long as they do not negatively impact daily trading liquidity, which has grown significantly post-NASDAQ listing. For Tafria (Colombia), management is still monitoring the impact of the recent government change on mining licensing, and will only decide to pursue development, continue care and maintenance, or sell after clearer regulatory direction emerges in the second half of 2026.

• Q: What is Aura's outlook for gold prices, and how do returns on internal expansion compare to M&A returns? /

  A: Management is constructive on gold prices, citing strong fundamentals: ongoing large U.S. deficits, rising military spending from geopolitical conflict, and continued record gold purchases from China that support medium-term price appreciation. All Aura projects are required to meet a minimum 20% IRR at conservative gold prices, but realized and projected returns are far higher: Almas expansion has an expected IRR above 50%, Borborema above 40%, and Era Dorada over 30%. Both organic brownfield expansion and M&A acquisitions have delivered returns well above initial projections, with brownfield expansion typically generating slightly higher returns due to existing infrastructure, while M&A drives the scale growth needed to reach targeted company size.