Among Latin American countries Brazil stands out in terms of the conditions it offers for a company planning to invest in developing a new mine. This is the opinion of Rodrigo Barbosa, CEO of Aura Minerals, a gold producer with assets in Mexico, Honduras, the United States, and Brazil, which expects to invest two-thirds of its current R$ 1.5 billion investment budget in developing projects in Brazilian territory. The company is now setting up its Almas project in the state of Tocantins, planning to follow up with its Matupá project in Mato Grosso.
A mining project is a long-term investment, Barbosa notes, which means that juridical security is a fundamental factor in the investor’s decision. Anyone putting capital into a mining venture needs to have the assurance that the rules are not going to change radically within a horizon of ten, fifteen, or twenty years. The company needs to be confident that private property is taken seriously and respected. If a company makes large investments, discovers deposits, starts operating a mine, and then its land is invaded or its assets seized, that can only cause enormous insecurity. Therefore juridical security is of the greatest importance. Another strong point in Brazil’s favour, Barbosa says, is that there is a balance between the institutions exercising political power.
Aura Minerals, which was already listed on the Toronto Stock Exchange, has also successfully concluded an IPO on Brazil’s B3 stock exchange and in a sense has cleared a path for other mining companies to obtain a Brazilian stock market listing. For the time being, Aura is the only gold mining company with a B3 listing, but Rodrigo Barbosa says he is a strong believer in the development of the capital market for mining in Brazil, which has several highly interesting aspects. “It begins with the depth of the capital market. What does this mean? It means Brazil has a high Gross Domestic Product (GDP), investors have billions of dollars to invest in the country, and they are looking for opportunities.” He is also confident that the Brazilian investor is highly qualified, takes the trouble to understand the fundamentals of the business, has a clear understanding of the key variables, and feels comfortable with the investment he is making. “When the investor understands and sees that the story is consistent, he will make his funds available.” For all these reasons, Barbosa sees the Brazilian capital market as having enormous potential for mining companies.
In Aura Minerals’ case the IPO on the Brazilian market, occurring in mid-2020, enabled it to raise the capital it needed to fund its growth programme, expected to raise capacity to 400,000 ounces of gold per year by 2024. This would be almost double the company’s 2021 output. To reach this targeted production level, Aura is relying mainly on its two most advanced Brazilian projects, Almas and Matupá.
In this interview Barbosa gives a detailed account of Aura Minerals’ growth trajectory, the advantages that Brazil offers for investments in mining, and the potential of capital markets as a source of funding for mining ventures.
Read the whole article on Brazil Mineral Special Issue 2022
