SSR Mining - Q2 2024

Transcript

Operator (participant)

Please be advised that this call is being recorded. Should anyone need assistance during the conference call, they may signal an operator by pressing Star then zero. 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.

Alex Hunchak (Head of Investor Relations)

Thank you, operator, and hello, everyone. Thank you for joining today's conference call, during which we'll provide an update on the Çöpler incident, as well as a review of our second quarter financial results. Our consolidated financial statements have been presented in accordance with US GAAP. 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 in our news release related to this call. Please note that all figures discussed during the call are in US dollars, unless otherwise indicated. 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.

Rod Antal, Executive Chairman, will be joined on today's call by Michael Sparks, Chief Financial Officer, and Bill MacNevin, EVP, Operations and Sustainability. I'll now turn the line over to Rod.

Rod Antal (Executive Chairman)

Great, and thanks, Alex. I will start with an update on Çöpler, summarizing where the site currently stands, and then we'll provide an update on the second quarter results from Marigold, Seabee, and Puna, with all three operations performing well against plan to this point in the year. At Çöpler, there have been four priorities in our ongoing efforts since the incident. In summary, these are: one, the recovery of our missing colleagues. Two, the containment of the incident. Three, the remediation of the site. And lastly, four, the incident review and preparing for next steps. With respect to the recovery of our missing colleagues, the nine individuals who were lost as a result of the tragic incident have been recovered, 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. To date, we have retained a full complement of salaried staff at Çöpler. Secondly, all of the planned containment infrastructure, including a grout curtain, cofferdam, and buttress, as well as pumping systems and the Sabırlı 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. Third, with respect to remediation, we continue to prioritize the cleanup of the Sabırlı 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 Sabırlı Valley. The total remediation spend in the second quarter was $55 million, against our estimated total remediation spend of $250 million-$300 million. We are continuing discussions with the Turkish government officials around the remediation plan, including the approval and construction of the East Storage Facility. As we look ahead, it's important to note that the investigations into the cause of the Çöpler incident continue, and we are cooperating fully with the relevant authorities in Türkiye. We have commissioned independent third parties to review the design, construction, and operation of the heap leach pad. To date, these reviews have not identified any material non-conformance with the construction or operation of the heap leach pad relative to third-party design parameters.

Simultaneously, we continue to work closely with all the relevant authorities to advance the permits required to restart the Çöpler mine. These include the reinstatement of the Çöpler 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. Certainly, there is a lot of work ahead of, for us to Çöpler as we continue to advance the remediation efforts. However, we have made meaningful progress to date and remain fully committed to a restart of the operation once we receive all the necessary permits. Now with that, we'll move on to slide 4, where Michael will discuss the second quarter results.

Michael Sparks (CFO)

Thank you, Rod, and good afternoon, everyone. Second quarter of 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 in Chinchillas, representing approximately $245 per ounce.

...For the first half, Marigold, Seabee, and Puna combined to produce 156,000 gold equivalent ounces, in line with our continued expectations for a 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 million, inclusive of the aforementioned $55 million in remediation costs and another $17 million in cash care and maintenance costs at Çöpler. 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 continued to advance brownfield exploration programs at Marigold, Seabee, and Puna, which Bill will discuss later.

Additionally, site establishment and engineering activities at Hod Maden 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 second 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. As a reminder, in the first quarter of 2024, we booked a $250 million remediation expense for costs we expect to incur at Çöpler, and the impact of this expense was fully reflected in first quarter income statement. Including the remediation spend at Çöpler, second quarter cash generated by operating activities was -$78 million, while free cash flow was -$116 million.

As noted, our total cash position remains strong at $358 million. 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 Çöpler, as well as our reinvestment needs across the business. Now on to Slide 7, where Bill will discuss the operations, starting with Marigold.

Bill MacNevin (EVP, Operations and Sustainability)

Thanks, Michael. Marigold's second quarter production of 26,000 ounces was in line with expectation. The 2024 mine plan called for the second quarter to feature the lowest production and highest costs of the year, reflecting the focus on waste stripping at Red Dot in the first half of 2024, 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 costs to improve meaningfully in the second half of the year, particularly in the fourth quarter. Marigold remains on track for its full-year production and cost guidance. Brownfield 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, second quarter production was 17,000 ounces at an AISC of $1,626 per ounce. Production and costs were in line with expectations, as grade, mined, and processed are expected to average between 5 and 6 grams per tonne for the remainder of 2024. Seabee remains on track for full-year guidance. Exploration activity at Seabee continues to focus on near mine extensions to existing underground mineralization, as well as the continued advancement of Porky and Porky West targets. The Porky targets represent a potential mine life extension opportunity, and the Seabee team are aggressively advancing technical studies to better delineate the opportunity. Now on to Puna. Puna produced 2.7 million ounces of silver in the second quarter, a strong bounce back from softer production in the first quarter due to heavy rains.

AISC of $15.90 per ounce in the second quarter demonstrated Puna's significant free cash flow margins in the current silver price environment. With first half production of 4.6 million ounces of silver and an AISC 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 Cortaderas target through near mine drilling. Now we'll turn back to Rod for closing remarks.

Rod Antal (Executive Chairman)

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

Operator (participant)

Thank you, Mr. Antal. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Lawson Winder with Bank of America. Please go ahead.

Speaker 5

Thanks, operator. Hello, Rod and team. Thanks for the update and my condolences to your colleagues and their families. I just wanted to excuse me, 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 Çöpler. And implied in that is that the mine will restart. Have you received indications from Turkish authorities suggesting that the mine, you know, will start at some unknown time and under some unknown conditions?

Rod Antal (Executive Chairman)

Yeah, Lawson, as you can appreciate, I mean, the focus for us has been on the priorities as I outlined, and, you know, 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 gonna provide too much more color or comment on those, but, we are actively discussing the work forward plan for Çöpler 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. 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?

Rod Antal (Executive Chairman)

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 obvious Çöpler incident. And that was a comprehensive refresh across each one of the operations. The exploration this year is obviously targeted on those targets, 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. 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 our Seabee and Puna.

Speaker 5

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?

Rod Antal (Executive Chairman)

Look, we haven't even got to that yet. We won't even assess the gold price until the end of the year. But I think, from memory, 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 (participant)

This concludes the question and answer session.

Rod Antal (Executive Chairman)

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

Operator (participant)

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