SSR Mining Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 8, 2024

There are 7 speakers on the call.

Operator

Hello, everyone, and welcome to SSR Mining's First Quarter 20 24 Financial Results Conference Call. Please be advised that this call is being recorded. At this time, I would like to for opening remarks, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

Speaker 1

Thank you, operator, and hello, everyone. Thank you for joining today's conference call, during which we'll provide an update on the Copler incident as well as a brief review of our Q1 financial results. Our consolidated financial statements have been presented in accordance with U. S. GAAP.

Speaker 1

These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. To accompany our call, there is an online webcast, and you will find the information to access the webcast and our news release related to this call. Please note that all figures discussed during the call are in U. S. Dollars, unless otherwise indicated.

Speaker 1

Today's discussion will include forward looking statements, so please read the disclosures and the relevant documents. Additionally, we will refer to non GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. Ron Antal, Executive Chairman, will lead today's call and members of our executive team, including Michael Sparks, Chief Financial Officer Eddie Farid, Chief Strategy Officer and Bill McNevin, EVP, Operations and Sustainability, are also present on the call. I will now turn the line over to Rod.

Speaker 2

Great. Thanks, Alex. I'm going to speak first about Chirp load and provide all our stakeholders with an update on both our media priorities and on our path forward in Turkey. I will then provide an update on our ongoing operations in the Americas. The current priorities for Copler can be distilled into 4 clear categories.

Speaker 2

1, the recovery efforts for our 5 remaining colleagues 2, the containment efforts 3, the remediation plan and 4, planning for next steps. So, first, with respect to the recovery efforts, I would like to start by offering our sincere condolences to the families of our missing colleagues, as well as the community members who are impacted by the Copler incident. The primary focus at Copler has and continues to be the return of the remaining missing colleagues to their families. Our teams, in consultation with the relevant Turkish authorities, have been diligently working on finding the missing individuals and will continue to do so. All recovery activities are currently focused in the Suburly Valley.

Speaker 2

To date, over 6,700,000 tons of heap leach material has been relocated as part of the ongoing recovery, containment and remediation activity, including the removal of 4,200,000 tons from the Sibroli Valley. 2nd, the containment efforts. Since the incident, our containment efforts have advanced alongside the removal of the displaced material. This work includes activities such as the installation of a grout curtain, copper dam, and buttress, which are substantially complete. There is also the ongoing installation of pumping systems and diversion channels.

Speaker 2

We currently expect the removal of all the displaced heap leach material from the Suburly Valley and into temporary storage locations to be completed in the Q3 of 2024. 3rd, the permanent remediation planning. While our teams on the ground have advanced the recovery and containment work, we have also worked with the Turkish government, independent experts and external consultants to develop a remediation plan. This plan includes, among other things, permanent closure of the heap leach pad and construction of a long term storage facility for the displaced heap leach material. This facility will be designed to permanently store the approximately 18,000,000 to 20,000,000 tons of displaced material.

Speaker 2

The future remediation work is expected to cost between 250 dollars to $300,000,000 on a 100 percent basis. This is in addition to the approximately $25,000,000 already spent since the incident in February. We expect work to be completed over a 2 to 3 year period. With the company's total cash position at $467,000,000 at the end of the first quarter, cash flow from our 3 ongoing operations and no balance outstanding on our revolving credit facility, we are well positioned to fund this remediation work in the future. And this transitions us to the initial plans for the next steps.

Speaker 2

In order to restart the operations, the company will require the reinstatement of the previously suspended environmental impact assessment and operating permits. At this time, it remains too early to provide guidance of if and when the mine will restart. But for future planning purposes, we anticipate the sulfide plant will initially process the more than 700,000 ounces of gold from the sulfide stockpiles while remediation work is completed. Now let's move on to Slide 5 and discuss the 2024 operating results. Q1 2024 production was 102,000 gold equivalent ounces at an all in sustaining cost of $15.69 per ounce, including 80,000 gold equivalent ounces from Marigold, CB and Puna.

Speaker 2

The results from these three operations were in line with our expectations for a back half weighted production profile and each asset remains well on track for the full year production and cost guidance. As a reminder, Marigold's 2024 production profile remains 70% weighted to the second half of the year, while Puna's production is 55% weighted to half 2. Accordingly, we expect the second quarter to be our highest cost and lowest production period of the year. However, over 2024, we expect the through operations will deliver solid asset free cash flow. On the development side, while the scope of the planned activities for 2024 at Hobbatten have been reduced, we have continued to advance engineering and project execution planning and the technical studies.

Speaker 2

We will provide additional updates at a later date. Moving on to Slide 6 and a brief look at the financial results. We recorded an attributable net loss of $1.42 per share in the Q1, reflecting the financial impacts of the Copler incident, which we will discuss shortly. Adjusted net income per share was $0.11 and we generated $25,000,000 in operating cash flow in the quarter. Free cash flow was a negative $9,000,000 As noted, our total cash position is $467,000,000 with an additional undrawn revolving credit facility available.

Speaker 2

We continue to have a solid liquidity position to manage remediation costs at Copler and reinvestment needs across the business going forward. Moving on to Slide 7 and shed some more color on the non cash and cash impacts of the Copler incident. As I mentioned, our Q1 results were significantly impacted by the Copler incident. We recorded charges totaling $288,000,000 including costs incurred to date plus future remediation costs and legal contingencies. This reclamation and remediation work will include the construction of the East Storage Facility, displaced heap leach material movement, heap leach pad remediation and all containment infrastructure.

Speaker 2

In addition, we recorded an impairment of $76,000,000 for all heap leach inventory, which contained an estimated 44,000 ounces of recoverable gold, and an impairment of $38,000,000 for the now obsolete heap leach equipment and infrastructure, given the heap leach pad facility will be permanently closed. I'm on to Slide 9, a discussion on the operating results beating with Marigold. Marigold's 1st quarter production of 35,000 ounces was in line with our expectations. The 2024 minutee plan called for the Q1 to feature the lowest quarterly stacked ore grades, reflecting the focus on waste stripping at Red Dot in the first half of this year. Despite this, the all in sustaining cost of $14.30 per ounce were better than expected, largely due to the timing of the capital spend.

Speaker 2

Quarter 2 all in sustaining costs are expected to be above full year guidance as a result of the deferral the capital spend from quarter 1. Barigold remains well on track for its full year production and cost guidance. Moving on to Seabee on Slide number 10. At CB, the 1st quarter production was 24,000 ounces at an all in sustaining cost of $14.16 per ounce. Production and cost were slightly better than planned, reflecting the processing of higher grade material stockpiled in the Q4 of 2023.

Speaker 2

The remainder of the year, Seabee expects mined and processed grades to average between 5 grams and 6 grams per tonne. Seabee remains on track for its full year production and cost guidance as well. The exploration activities at Seabee continues to focus on near mine extensions to existing underground mineralization, as well as continued advancements of Porky and the Porky West targets. The Porky targets represent a potential mine life extension opportunity and the CB team is aggressively advancing the technical studies to better delineate this opportunity. Finally, let's move on to Puna on Slide 11.

Speaker 2

Puna produced 1,900,000 ounces of silver in the Q1, slightly lower than expected due to a significant rainfall that impacted the mining rates. Despite this, Puna remains well on track for full year production guidance of 8,750,000 to 9,500,000 ounces of silver at an all in sustaining cost of 14.75 to $16.25 per ounce. Exploration and technical work continues to evaluate opportunities to extend operations at Puna through potential extensions at Chinchillas and the continued advancement of the Cortaderas target through nearby drilling. Our team at Chirbela remains focused and steadfast as we continue with the overall recovery efforts. This has been supported by the strong operating results of Marigold, CB and Puna, and I want to recognize our team's focus and commitment during a difficult time.

Speaker 2

Before I open up for questions, I would like to remind folks there are certain topics around legal matters and ongoing investigations that I cannot comment on at this time. So, operator, if we can open up the call now to any questions people might have. Thank you.

Operator

Thank you, Mr. Antal. We will now begin the question and answer session. The first question comes from Ovais Habib with Scotiabank. Please go ahead.

Speaker 3

Hi Rod and SSR team. Just a couple questions from me. Just regarding the remediation costs at Choeppler of $250,000,000 to 300,000,000 dollars Does this amount include any sort of care and maintenance cost throughout the 2 to 3 years that's going to take you to complete the remediation?

Speaker 2

No, it doesn't, Ovais. It takes into account the construction of the storage facility, the remediation efforts on the heap leach pad, etcetera. If you look at the financials, the care and maintenance costs in the Q1 are around, I think, dollars 17,000,000 per memory. And so I think if you allow for those per quarter going forward and I think it would also depend on obviously how long that goes for while we're shut down.

Speaker 3

Okay, thanks for that Rod. And just in regards to the environmental permits, so will you look to apply for the environmental permits while the remediation is ongoing or once the remediation is complete? Essentially, I mean, is there a possibility that the sulfide plant could start before the remediations are complete?

Speaker 2

Yes, look, I think, Ovais, as I sort of mentioned and will keep saying, our efforts and focus has really been on finding our missing colleagues and the work to define what the remediation efforts will be and getting that those in consultation with the government authorities approved. We've only really just started to turn our mind to the start up and all the other factors that go with it, which will require us to get that EIA permit reinstated and some other things as well. So, it's a little bit early to say exactly what pathway we need and how it's going to take and all those other questions I know you all have, but that will come over time.

Speaker 3

Okay. Maybe I'll jump back into the queue and let some other guys come in. But thanks for taking my initial questions.

Operator

The next question comes from Mike Parkin with National Bank. Please go ahead.

Speaker 4

Thanks guys. First on Seabee, historically you've always had a big working capital outflow in the Q1 with the inventory build at CB on the ISRO. I couldn't find any mention of that in the 10 Q. Is that something that has happened? Did you get everything to site that you were hoping for?

Speaker 2

Firstly, Mike, welcome back.

Speaker 4

Thank you.

Speaker 2

Hope you're doing well. We actually had a very successful winter program this year on the ice road, probably our best one for many years. So, we didn't have the normal sort of build ups that we've had before where we've had some delays on the ice roads to get the logistics up and down the road itself. So, it was a slightly different outcome this year. We have a much more efficient, better outcome in terms of that build up and efficiency in that working capital.

Speaker 4

Okay, that's good. And then on Schirfler, are you like can you give us I know you can't speak on everything, but in terms of who you're dialoguing with, where you are in the process, is there still like an investigation being carried out by, I don't even know what ministry, like Ministry of Labor, Ministry of Environment. Are those concluded and you're awaiting their ruling on that or like where are you in the process on that front?

Speaker 2

Yes, look, and again, Mike, I think you'd appreciate. I can't comment specifically on the ongoing investigations and the legal proceedings. But on the ground, we have I think we mentioned it last quarter when the incident happened, we have many government stakeholders actually at Copler from the various different ministries that we would normally interact in on mining normal mining activities, as well as other ministries that have been a great assistance on the ground for us. And so, those conversations have been going on since day 1. And discussing everything, as I mentioned, on Ovais' questions around the remediation efforts, around how we're going to look at the long term storage solutions for the displaced heap leach material, how we remedy the heap leach pad and close that as well, etcetera, etcetera.

Speaker 2

So, all that dialogue has been ongoing at the various ministry levels with at all levels within those ministries, and that will continue.

Speaker 4

Okay. And then just one follow-up on the remediation work that you're estimating will cost $250,000,000 to $300,000,000 Is that are those plans like concrete and improved by the government or is that a work in progress?

Speaker 2

It's based on the discussions in engineering design that we have done to date. So, those estimates are based on a lot

Speaker 1

of work and a lot of detailed work

Speaker 2

at this stage. So yes, it's well advanced in terms of the engineering.

Speaker 4

Okay. And then just over back over the ocean to Marigold. Barrick's regularly commenting of an extremely tight labor market in Nevada. But then others that we talk to know that it's not doesn't seem to be as bad. What's your experience with Marigold?

Speaker 4

Are you finding turnover rates are elevated or more in line with historical norms? Or are you benefiting from possibly gaining workers from other sites?

Speaker 2

Mike, I'm going to pass that one over to Bill to answer.

Speaker 5

Good afternoon, Mike. We do a lot of work with our work force, both obviously focusing on where we're going as a business, but also on the development of the people and their part in that. In terms of the turnover in general, we're really just at our historic levels. And if anything, we're doing a lot of work to improve off that. So no real impact to the business, and we're looking to leverage on reducing it even further.

Speaker 4

Great. Thanks very much. Rod, thanks. It's good to be back.

Speaker 1

Good. Thanks, Mark.

Operator

The next question comes from Carey MacRury with Canaccord Genuity. Please go ahead.

Speaker 6

Hi, good afternoon guys. I'm just wondering if you are able to restart the plant with stockpiles only. Do you have a sense of what the cash cost of that would be?

Speaker 2

Look, Harry, that detail will come down the track Once we have clarity about the pathways, gates, etcetera, etcetera, we'll reset those planning efforts around that, but it's just too early to talk about those things to share.

Speaker 6

Okay, fair enough. And just on the convertible debt on the investors have the right to redeem potentially in 2026 or have the company repurchase. Is there anything related to the incident in Turkey that could trigger that in 2026 or is that related to something else?

Speaker 2

I'm going to pause that one over, Eddie. Yes, not at this stage.

Speaker 6

Any detail around that or not really? Look, if you go through the contracts of the convertible notes, at this stage, is nothing around the incident that gives us concern regarding the convertible notes.

Speaker 3

Okay.

Speaker 2

Thank you.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Mr. Antal.

Speaker 2

Thanks, operator. And again, I appreciate everyone joining us today and look forward to continuing with the updates as we move along, particularly at Copler. Good evening to you all.

Operator

This concludes today's conference call.

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