SSR Mining Q2 2024 Earnings Call Transcript

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July 31, 2024

There are 6 speakers on the call.

Operator

Please be advised that this call is being recorded. At this time, for opening remarks and introductions, 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 Tochler incident as well as a review of our Q2 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, CASX 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 in our news release linked 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 disclosures in 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. Rob Antal, Executive Chairman, will be joined on today's call by Michael Sparks, Chief Financial Officer and Bill McNevin, EVP, Operations and Sustainability. I'll now turn the line over to Rob.

Speaker 2

Great, and thanks, Alex. I will start with an update on Copler, summarizing where the site currently stands, and then we'll provide an update on the 2nd quarter results from Marigold, Seabee and Puna with all three operations performing well against plan to this point in the year. At Copler, there have been 4 priorities in our ongoing efforts since the incident. In summary, these are: 1, the recovery of our missing colleagues 2, the containment of the incident 3, the remediation of the site and lastly, 4, the incident review and preparing for next steps. With respect to the recovery of our missing colleagues, the 9 individuals who were lost as a result of the tragic incident have been recovered.

Speaker 2

And we want to thank all those who have worked tirelessly to locate and return our colleagues to their families. We are continuing to support the families, our employees and the community members impacted by the incident. And to date, we have retained a full complement of salaried staff at Copler. Secondly, all of the planned containment infrastructure, including a grout curtain, cofferdam and buttress, as well as pumping systems and the Suburly Creek diversion have been successfully installed. Public statements from Turkish government officials continue to reiterate that there has been no recordable contamination to local soil, water or air in sampling locations.

Speaker 2

3rd, with respect to remediation, we continue to prioritize the cleanup of the Suburly Valley and remain on track to have all the displaced heap leach material removed by the end of the third quarter. Of the total displaced material, we have moved more than 70% into temporary storage locations. More importantly, this includes more than 90% of the material from the Superlle Valley. The total remediation spend in the 2nd quarter was $55,000,000 against our estimated total remediation spend of $250,000,000 to $300,000,000 We are continuing discussions with the Turkish government officials around the remediation plan, including the approval and construction of the East into the cause of the Turbola incident continue, and we are cooperating fully with the relevant authorities in Turkey. We have commissioned independent third parties to review the design, construction and operation of the heap leach pad.

Speaker 2

To date, these reviews have not identified any material non conformance with the construction or operation of the heap leach pad relative to 3rd party design parameters. Simultaneously, we continue to work closely with all the relevant authorities to advance the permits required to restart the Copler mine. These include the reinstatement of the Copler EIA and operating permits. If and when the permits are granted, we would anticipate commencing sulfide plant operations through the processing of existing ore stockpiles on-site. These stockpiles contain more than 700,000 ounces of gold.

Speaker 2

Certainly, there is a lot of work ahead for us to chirp on as we continue to advance the remediation efforts. However, we have made meaningful progress today and remain fully committed to a restart of the operation once we receive all the necessary permits. And now with that, we'll move on to Slide 4, where Michael will discuss the 2nd quarter results.

Speaker 3

Thank you, Rod, and good afternoon, everyone. 2nd quarter 2024 production was 76,000 gold equivalent ounces at all in sustaining costs of $2,116 per ounce, which includes cash, care and maintenance costs incurred at Tripler, representing approximately $2.45 per ounce. For the first half, Marigold, Phoebe and Puna combined to produce 156,000 gold equivalent ounces, in line with our continued expectations for our second half weighted production profile. And each asset remains well on track for their full year production and cost guidance. We finished the quarter with a cash position of $358,000,000 inclusive of the aforementioned $55,000,000 in remediation costs and another $17,000,000 in cash care and maintenance costs at Turfler.

Speaker 3

With an undrawn revolving credit facility and an outlook for improved production and free cash flow generation in the second half, we remain in a strong position financially. During the quarter, we continue to advance brownfield exploration programs at Marigold, Seabee and Puna, which Bill will discuss later. Additionally, site establishment and engineering activities at Hovmaden continue to progress as we move towards a construction decision for the project. On to Slide 5 for a brief look at the financial results. We recorded attributable net income of $0.05 per share in the 2nd quarter, while adjusted net income per share was $0.04 reflecting the exclusion of the mark to market gain on our portfolio of marketable securities.

Speaker 3

As a reminder, in the Q1 of 2024, we booked a $250,000,000 remediation expense for costs we expect to incur at Turfler and the impact of this expense was fully reflected in 1st quarter income statement. Included in remediation spend at Turfler, 2nd quarter cash generated by operating activities was negative $78,000,000 while free cash flow was negative $116,000,000 As noted, our total cash position remains strong at $358,000,000 With an additional undrawn revolving credit facility and strong second half free cash flow expected from the other operations, we remain well positioned to manage remediation costs at Schirfler as well as our reinvestment needs across the business. Now on to Slide 7, where Bill will discuss the operations starting with Marigold.

Speaker 4

Thanks, Michael. Marigold's 2nd quarter production of 26,000 ounces was in line with expectation. The 2024 minutee plan called for the 2nd quarter to feature the lowest production and highest cost of the year, reflecting the focus on waste stripping at Red Dot in the first half of twenty twenty four and a catch up in sustaining capital spend to bring us back on track for the year to date spend. With the first half now complete, we expect production and cost to improve meaningfully in the second half of the year, particularly in the Q4. Marigold remains on track for its full year production and cost guidance.

Speaker 4

Ground fill growth activity at Buffalo Valley and other near mine targets advanced during the quarter as we look to continue to replace mine depletion and potentially further extend Marigold's operating life. Now on to Seabee. At Seabee, 2nd quarter production was 17,000 ounces at an ASIC of 16.26 per ounce. Production and costs were in line with expectations as grade mined and processed are expected to average between 5 grams 6 grams per ton for the remainder of 2024. Seabee remains on track for full year guidance.

Speaker 4

Exploration activity at CB continues to focus on near mine extensions to existing underground mineralization, as well as the continued advancement of Porquay and Porquay West targets. The Porquay targets represent a potential mine life extension opportunity and the CB team are aggressively advancing technical studies that are delineate the opportunity. Now on to Puna. Puna produced 2,700,000 ounces of silver in the 2nd quarter, a strong bounce back from softer production in the Q1 due to heavy rains. AISC of $15.19 per ounce in the 2nd quarter demonstrated Pune's significant free cash flow margins in the current silver price environment.

Speaker 4

The first half production of 4,600,000 ounces of silver and A6 of $15.36 per ounce. Puna remains well on track for full year guidance. In addition, exploration and technical work continues to evaluate opportunities to extend operations at Puna through potential extensions at Chinchillas and continued advancement of the Cortevares target through near mine drilling. Now, I'll turn back to Rod for closing remarks.

Speaker 2

Thanks, Bill and Michael. As you can see, our second quarter results were well aligned to our expectations with Marigold, CB and Puna all on track to meet full year guidance. We will continue to diligently advance remediation efforts at Copler and remain fully committed to returning to operations in Terguin. So with that, I will turn the call over to the operator for any questions you may have.

Operator

Thank you, Mr. Antal. We will now begin the question and answer session. The first question comes from Lawson Winder with Bank of America. Please go ahead.

Speaker 5

Thanks, operator, and hello, Rod and T. Thanks for the update. And my condolences to your colleagues and their families. I just wanted to ask about a statement in the release where you said that you're not able to estimate when and under what conditions the mine will resume at authorities suggesting that the mine will start at some unknown time and under some unknown conditions?

Speaker 2

Yes, Lawson. As you can appreciate, I mean, the focus for us has been on the priorities as I outlined and moving diligently through each one of those sequences is really important to put us in the right environment for us to gain those approvals for restart. So those discussions are underway. Obviously, I'm not going to provide too much more color or comment on those, but we are actively discussing the work forward plan for Copler as we move through each one of those stages.

Speaker 5

Okay. All right. Well, thanks. That's helpful, Rod. And then could I also ask about some of the exploration you guys have touched on in your presentation and in the results.

Speaker 5

When you look to year end, so two questions on the reserve update. With the existing operations, do you anticipate replacing reserves based on drilling to date? And do you anticipate any change to the gold price assumption on which those reserves are based?

Speaker 2

As you remember last year, Lawson, we actually did a pretty big comprehensive update to all of our technical reports. And I think it was sort of lost earlier this year with the obviously the Sherpa incident. And that was a comprehensive refresh across each one of the operations. The exploration this year is obviously targeted on those targets to particularly at both Puna and Seabee to extend mine life, but that work program is still active. So it's a bit early to tell exactly what the results will be or indeed the actual timing of those results to do any more updates to what we already did pretty comprehensively during 2023.

Speaker 2

So that's the work plan at the moment. We'll obviously release exploration results as and when they're available or meaningful exploration results as and when they're available. But the real key priority right now is RCB and Puna.

Speaker 5

And then on the gold price assumption, is there any intention to change that for the year end reserve statements or just keep that in line with the technical reports?

Speaker 2

Look, we haven't even got to that yet. We might even assess the gold price until the end of the year. But I think from memory room, when we did the tech reports for this year, early this year, we're well in line with what our peer group was doing.

Speaker 5

Okay. Thank you.

Operator

This concludes the question and answer session.

Speaker 2

Right. Appreciate it. Thank you, operator, and thank you for joining us today, and we'll talk again here soon. Thank you.

Operator

This brings to close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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