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SSR Mining (NASDAQ: SSRM)
Q3 2024 Earnings Call
Nov 06, 2024, 5:00 p.m. ET

What’s Inside:

• Opening Remarks
• Q&A Session
• Participants on the Call

Opening Remarks:

Operator

Hello and welcome to SSR Mining’s third quarter 2024 financial results conference call. This call is being recorded. To kick things off, I’ll hand it over to Alex Hunchak from SSR Mining.

Alex Hunchak — Investor Relations

Thank you, operator, and thank you all for joining us on today’s conference call. We will discuss the update on the Copler incident and review our third-quarter financial results. Our consolidated financial statements comply with U.S. GAAP and are available on EDGAR, SEDAR, the ASX, and on our website. Today’s figures will be in U.S. dollars unless specified otherwise.

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Today’s remarks will include forward-looking statements, so please refer to the disclosures provided in our documents. We will also discuss non-GAAP financial measures; refer to our press release for related GAAP comparisons. Rod Antal, our executive chairman, will be joined by Michael Sparks, our chief financial officer, and Bill MacNevin, our EVP of operations and sustainability.

I will now pass it over to Rod.

Rod Antal — Executive Chairman

Thank you, Alex, and thank you all for being here today. I’ll start with an update on the Copler incident, covering the progress we’ve made and our focus for the coming period. We will follow with our financial results and operational highlights for Marigold, Seabee, and Puna.

At Copler, we have made substantial progress on four main goals since the incident: recovering our missing colleagues, containing and remediating the site, investigating the cause of the heap leach failure, and preparing for the mine’s restart. I’m relieved to report that all nine missing individuals have been recovered and returned to their families. We continue to support the impacted families and community members.

Next, the planned containment infrastructure is in place and functioning well. Turkish government officials confirm that there is no contamination in the local soil, water, or air from the incident. We are collaborating with Turkish authorities on the remediation efforts, having moved over 16 million tonnes of displaced heap leach material into temporary storage, particularly from the Sabirli Valley.

Importantly, the heap leach pad is set to be permanently closed, stopping any future heap leach processing at Copler. Ongoing discussions with the Turkish government include finalizing our remediation plan, which entails constructing an East storage facility for this displaced material. The overall remediation effort is expected to cost between $250 million and $300 million, with a completion date spanning 24 to 36 months. In the third quarter of 2024, we spent $48 million on these activities, bringing our total since April 1 to $103 million.

Regarding our investigation, the initial design of the heap leach facility, created before production began in 2010, passed multiple reviews by independent engineering firms. This investigation has not uncovered any significant nonconformance in construction or operations. As we work towards a potential restart, we continue to engage with regulatory authorities to secure the necessary permits. We anticipate that Copler could resume initial operations within 20 days following the reinstatement of all regulatory approvals.

I now invite Michael Sparks to share details on our third-quarter results.

Michael Sparks — Chief Financial Officer

Thank you, Rod, and good afternoon, everyone. In the third quarter of 2024, we produced 97,000 gold equivalent ounces with all-in sustaining costs of $2,065 per ounce. This figure includes cash care and maintenance costs at both Copler and Seabee, which averaged about $252 per ounce. Seabee faced temporary care and maintenance due to forest fires on August 21, but operations resumed on October 11. Year to date, Marigold, Seabee, and Puna collectively produced 249,000 gold equivalent ounces.

During this quarter, we advanced our exploration programs at Marigold, Seabee, and Puna, which Bill will elaborate on later. Our site establishment and engineering work at Hod Maden continue to progress smoothly. Moving to Slide 5, let’s take a moment to review the upcoming developments.

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SSR Mining Reports Third Quarter Financial Results: Challenges and Forward Outlook

SSR Mining Inc. has released its financial results for the third quarter, showing attributable net income of $0.05 per share. Adjusted net income per share was reported at $0.03, largely due to the exclusion of minor tax and foreign currency gains during the period.

It’s important to highlight that SSR Mining does not account for care and maintenance costs, which significantly impact adjusted net income. When including remediation spending at Copler, cash generated by operating activities for the third quarter fell to negative $1 million, and free cash flow also showed a decline, landing at negative $34 million. The company ended the quarter with $334 million in total cash and a net cash position of $104 million, alongside total liquidity of $834 million. With robust liquidity prospects and expectations for improved production and cash flow in the upcoming fourth quarter, SSR remains financially sound and prepared to manage Copler’s remediation costs and reinvest in business needs.

Operations Update: Marigold and Seabee

Bill MacNevin — Executive Vice President Operations and Sustainability

Thank you, Michael. Marigold’s third-quarter production reached 48,000 ounces, meeting our expectations. As outlined in the 2024 mine plan, the fourth quarter is expected to yield the lowest production and the highest costs of the year. We remain on track to achieve full-year production guidance between 155,000 to 175,000 ounces.

However, we project an increase in full-year costs, mainly due to rising royalty charges and unanticipated maintenance costs. Approximately 60% of the increase in Marigold’s All-in Sustaining Cost (AISC) guidance arises from higher royalty expenses linked to a strong gold price in 2024. We anticipate that these cost pressures will also carry into 2025. Meanwhile, exploration and desktop studies at Buffalo Valley have progressed as we look to replenish the mine’s depleting resources and potentially extend Marigold’s operating life.

Moving on to Seabee, the mine produced 10,000 ounces in the third quarter, hindered by a temporary suspension of activities due to nearby forest fires on August 21. Fortunately, no staff were injured, and the Santoy processing plant was not significantly affected. Though some remote equipment suffered damage, operations successfully resumed on October 11.

In light of the operational halt, Seabee’s guidance for 2024 is now revised to between 65,000 to 70,000 ounces, with an AISC between $1,725 to $1,755 per ounce. The team is focusing on evaluating and drilling near-mine extensions of the existing underground mineralization while advancing the Porky and Porky West targets, which could potentially extend the mine’s life. Despite setbacks in surface drilling due to fires in the third quarter, the cleared vegetation now allows for new exploration opportunities in the forthcoming field seasons.

Puna’s Performance and Exploration Initiatives

Puna reported a significant output of 2.9 million ounces of silver in the third quarter, marking a second consecutive quarter of record throughput for the Pirquitas processing facility. Following strong operational results over the last two quarters, Puna’s silver production is now projected to be between 10 million to 10.5 million ounces for 2024, reflecting an increase of over 1 million ounces on a midpoint basis. Although cost expectations remain unchanged, the AISC of $1,537 per ounce indicates substantial free cash flow margins amid the current silver price landscape.

Exploration and technical evaluations continue at Puna, with efforts aimed at extending operations through potential developments at Chinchillas and near-mine drilling at the Cortaderas target. I’ll now hand the call back to Rod for final comments.

Rod Antal — Executive Chairman

Thank you, Michael, and thank you, Bill. Following the situation at Copler, we’ve committed to four essential milestones that will guide us toward a potential restart of the operation.

We are making steady progress across all fronts and anticipate a strong finish to the year at Marigold, Seabee, and Puna. Our ongoing goal is to enhance operations through excellence initiatives and brownfields growth projects as we approach 2025. As noted by Michael, developments on the Hod Maden project are underway, and we will provide an update on our anticipated 2025 capital expenditure with our regular guidance update early next year. Preliminary work continues to affirm Hod Maden as a high-quality asset expected to significantly contribute to our portfolio.

With that, I’ll now turn the call over to the operator for any questions.

Questions & Answers:

Operator

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. [Operator instructions] Our first question today comes from Ovais Habib from Scotiabank. Please go ahead.

Ovais Habib — Analyst

Hi, Rod and SSR team. I have a couple of questions regarding the Copler remediation. You’ve mentioned a temporary storage facility.

What kind of approvals are you currently waiting for, such as permits needed to construct a more permanent storage facility? Any details on that would be appreciated.

Rod Antal — Executive Chairman

Thank you, Ovais. The positive news is that we have successfully cleared almost all materials from the Sabirli Valley.

After the incident, we did not have a finalized design for the ultimate storage facility, which necessitated ongoing discussions with the government. We are evaluating various options for the permanent facility and ensuring that our plans align with Turkish regulations regarding closure requirements. The engineering design process is advancing, and we are in dialogue with regulators to ensure compliance.

We expect to finalize all approvals by early next year, after which construction efforts can begin, transitioning materials from the temporary to the permanent facility.

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Copler Mine Restart Discussions Bring Clarity on Production Limits

Operational Limitations Following EIA Regulations

Rod Antal — Executive Chairman

Yes, Ovais, that’s correct. The cancellation we announced was due to an administrative appeal in court. Efforts are underway in the country to address this situation with the relevant government departments. This process is ongoing.

The default position reverts to the 2014 Environmental Impact Assessment (EIA), which restricts throughput to 6,000 tonnes per day. Assuming all other factors remain constant, this will be our fallback strategy, and we’ll prepare for it accordingly. We will need to refresh the EIA eventually, and we aim to expedite those efforts as we move into next year.

Restart Timing and Remediation Processes

Ovais Habib — Analyst

Thanks, Rod. One last question: When it comes to restarting operations, do you need to complete all remediation efforts first, or can you resume while those efforts are ongoing?

Rod Antal — Executive Chairman

It’s not necessary to wait until all remediation work is finished. The discussions we’ve had indicate that while completing this work helps facilitate our conversations, it’s not a precondition for restarting operations. We are actively engaging with various levels of government to ensure that we can restart at Copler while fulfilling our commitments following the recent incident.

Ovais Habib — Analyst

Perfect. Thank you for that clarification, Rod. I appreciate it.

Thanks, everyone.

Operator

[Operator instructions] Ladies and gentlemen, we have reached the end of our question-and-answer session, and we will now conclude today’s conference call. [Operator signoff]

Duration: 0 minutes

Call Participants:

Alex Hunchak — Investor Relations

Rod Antal — Executive Chairman

Michael Sparks — Chief Financial Officer

Bill MacNevin — Executive Vice President Operations and Sustainability

Ovais Habib — Analyst

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