SSR Mining - Q3 2023

Transcript

Operator (participant)

Hello everyone, and welcome to SSR Mining's third quarter 2023 conference call. This call is being recorded. At this time, for opening remarks and introduction, I would like to turn the conference over to Alex Hunchak from SSR Mining. Please go ahead.

Alex Hunchak (VP of Investor Relations)

Thank you, operator, and hello everyone. Thank you for joining SSR Mining's third quarter 2023 conference call, during which we'll provide an update on our business and a review of our financial performance. Our third quarter 2023 consolidated financial statements have been presented in accordance with U.S. 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 relating to this call. Please note that all figures discussed during the call are in U.S. dollars, unless otherwise indicated. Today's discussion will include forward-looking statements, so please read the disclosures in the relevant documents.

Joining us on the call today are Edward Farid, Chief Corporate Development Officer; Alison White, Chief Financial Officer; and Bill MacNevin, Executive Vice President, Operations and Sustainability. Now, I will turn the call over to Eddie for his opening remarks on slide three.

Edward Farid (Chief Corporate Development Officer)

Thanks, Alex. Good afternoon to you all, and thank you for joining us today. First of all, I want to communicate that our Executive Chairman, Rod Antal, sends his regrets for not being able to join us today. Unfortunately, he is dealing with a family health emergency and is currently in transit. With respect to the quarter, as planned, we are pleased to report a strong third quarter operationally, which included record production for Marigold, as well as record throughputs at Puna. Third quarter production of 192,000 gold equivalent ounces at all-in sustaining costs of $1,289 an ounce, was a meaningful improvement over first half results.

These metrics drove nearly $100 million in free cash flow generation in the quarter, and we anticipate further production and cost improvement in the fourth quarter of this year as we continue to track towards the lower end of our full-year production guidance of 700,000 gold equivalent ounces, and as a result, the high end of our all-in sustaining cost guidance. We are also proud to have marked a significant milestone in the third quarter with the delivery of first production from Çakmaktepe Extension. This timeline is well aligned to our internal expectations, and most impressively, was delivered just six years after the initial drill hole was completed at the project. Since our 2021 technical report, we have had significant exploration success at Çakmaktepe Extension and are excited about the continued growth potential of the project.

As a result, we are now evaluating opportunities to optimize the flow sheet and meaningfully improve gold recoveries. I will discuss these opportunities in more detail, along with other aspects of our organic growth profile in a few moments. I wanted to also communicate a number of other key highlights from the third quarter. First, at Hod Maden, initial earthworks, site preparations, and infill drilling have begun as we advance the project toward a construction decision in mid-2024. Second, our overall liquidity position was enhanced during the quarter with an amendment to our revolving credit facility, expanding the facility's total capacity to an undrawn $500 million at a reduced margin and bringing our total liquidity position to more than $900 million. Third, our brownfield exploration portfolio continues to advance successfully as we look to extend mine lives at both Seabee and Puna.

Impressive drilling results from campaigns across the portfolio, including 46 grams a ton intercept over 6 meters at Seabee's Porky West target and 190 meters of 155 gram per ton silver and 10.6% zinc from the Cortaderas target at Puna. These are truly spectacular results and a strong reminder of our brownfield organic growth plans. Finally, we continued our track record of robust capital returns with nearly $90 million returned to shareholders over the year-to-date period as we track toward a minimum total return yield of 3.6% for the year. As we head towards the end of 2023, it is worth noting that we have committed substantive efforts towards the advancement of refreshed technical reports for both Marigold and Çöpler.

As we evaluate the interim results of the technical analysis being completed at both assets, we are working to maximize value while also ensuring an optimized production profile for the portfolio over the long term. At Çöpler, as I have noted, our continued success expanding the scale of the Çakmaktepe extension has triggered a revision to the prior life of mine plan, which featured 1.2 million ounces of production, with the majority of the project's ore stacked on heap leach pads and averaging approximately 60% recoveries. By planning to install grinding and leaching capacity at Çöpler, we can materially improve those recoveries and potentially deliver a significant valuation uplift for the entire operation. However, this will mean a slower ramp-up to full production levels until later in 2026, when this additional processing equipment is installed.

Combined with the expectation of a positive construction decision for Hod Maden next year, it is clear our business is moving into a reinvestment cycle over the next three years that will see production lower than the prior 2024 guidance range by approximately 10%-15%. We do, however, expect that the near-term reinvestment in our portfolio will drive production growth in the medium to long-term timeframe as Marigold production profile improves, the grind leach circuit comes online at Çöpler, and the Hod Maden project build is completed. We are excited by what's ahead, both into year-end and over the coming years. Our portfolio features an abundance of high return, low capital intensity growth opportunities that we expect will drive further NAV expansion going forward.

SSR Mining has a proud history as explorers, mine builders, and operators, as well as a long track record of prudent value added of M&A. Our business is in a strong position, supported by a robust balance sheet, including more than $900 million in total liquidity, and we are keen to continue building on our solid foundations. On to slide four, where I'll comment on ESG. ESG is, and long has been, a core value and focus for the company as it firmly underpins our success. We continue to prioritize the health and safety of our employees and business partners and are seeing positive results with respect to our safety metrics across the portfolio. In 2023, we reinvigorated a focused and formal leadership in the field initiative to drive engagement and improve safety performance across the operations.

This has been met with enthusiasm from our teams and is already showing positive results. Additional key initiatives this year include continued development of an action plan on our journey towards decarbonization, including evaluating options to incorporate renewable energy and technologies into our operating platforms. We are enhancing our water management plans for each of our assets and fine-tuning our efforts on integrated mine closure plans to ensure we leave a positive and lasting legacy for our local communities. Finally, over the coming months, we expect to become a signatory to the International Cyanide Management Code. While Marigold is already a signatory, bringing our entire portfolio to this level is another positive step forward on our ESG journey. As we have done previously, we continue to work hard to advance our ESG initiatives and look forward to sharing additional updates on that journey going forward.

On to slide five, where I'll turn over the presentation to Alison.

Alison White (CFO)

Thank you, Eddie. I will start with an overview of the results from the third quarter. Third quarter production of 192,000 gold equivalent ounces was largely in line with expectations and brought year-to-date production to 496,000 gold equivalent ounces. Sales in the third quarter were 196,000 gold equivalent ounces and were impacted slightly by the timing of concentrate shipments from Puna. We expect similar impacts at the end of the fourth quarter based on prior history, particularly given the holiday season, and as a result, expect fourth quarter sales to lag production. All-in sustaining costs of $1,289 an ounce was a meaningful improvement over the first half results and included costs associated with the scheduled maintenance shutdown at Çöpler.

We expect to see continued cost improvement in the fourth quarter of 2023. Attributable net income was $15.2 million, including a $37 million, or $0.18 per share charge associated with the increased corporate tax rate in Türkiye. As previously announced on July 15, Türkiye announced a 5% increase in the corporate tax rate from 20%-25%. That is retroactive to January 1st, 2023. The entire impact was recorded during this quarter. Despite the change in the overall tax rate to 25%, it is important to note that our cash taxes paid in Türkiye are not impacted in the near term, given existing incentive tax credit eligibility within the country. Adjusting for this tax rate change and other one-time items, adjusted attributable net income was $53 million, or $0.26 per diluted share.

In the quarter, we delivered positive free cash flow of $88 million, or $95 million, before working capital adjustments, bringing year-to-date free cash flow to $54 million, or $173 million before working capital adjustments. We expect another quarter of strong free cash flow during Q4, given our expectation of stronger production to close out the year. Now, turning to slide six, we can talk about SSR Mining's financial position. As a result of the strong free cash flow in the third quarter, our cash position is now $438 million, and net cash is $207 million.

In the third quarter, we accelerated the repayment of the final $36 million outstanding on the term loan, leaving the $230 million convertible note as the only debt outstanding on our balance sheet and further solidifying the strength of our financial position. The payoff of the term loan also removed the restriction on $34 million in cash, supporting our overall liquidity position as those funds transitioned to cash and cash equivalents. Balance sheet strength is one of the pillars of our approach to capital allocation and is further supported by the refinancing and extending the maturity of our revolving credit facility that also occurred during the quarter. The revolving credit facility now has a total capacity of $500 million at an improved borrowing cost, and brings total liquidity for the organization to $938 million.

We view this facility as another tool available to us as we enter a period of reinvestment within the business. Reinvesting in organic growth is the second pillar to our capital allocation strategy, and we expect it will come to the forefront over the coming three-year period as we commence construction at Hod Maden and move forward with the Çöpler expansion project. Capital returns represents the third pillar of our strategy, and let's flip to slide seven to discuss those further. Through the end of September, we have returned nearly $90 million to shareholders through our base dividend and share buyback program this year, and are on track to return at least $103 million to shareholders, or a minimum total return yield of 3.6% in 2023.

This follows yields of 5% in both 2021 and 2022, and will bring total capital return to shareholders over a three-year period to more than $450 million, approximately 16% of our market cap and something we are proud of. Our capital returns initiatives are generally meant to reflect the free cash flow profile of the business, and the buyback is a dynamic component to this strategy. While we are entering a period of investment and growth, our dividend, currently yielding 2%, will continue to provide a baseline to our approach to capital returns. Overall, our company remains in a strong financial position, and we expect further free cash flow generation into year-end. We are proud of our history of capital returns and going forward, anticipate sharing opportunities to reinvest in the organization.

Now, I'll turn the call over to Bill, our Executive Vice President of Operations and Sustainability, to review the operations.

Bill MacNevin (EVP of Operations and Sustainability)

Thanks, Alison. I've committed a significant portion of my time this year at the operations, working with our teams and local stakeholders to ensure operational delivery and continued improvement at each asset. It's pleasing to see these efforts beginning to bear fruit with a strong third quarter, including record gold production from Marigold and record average daily throughputs at Puna. We have a lot of work ahead, but there's no doubt that our teams are fully aligned on delivering our production targets to the remainder of the year. Before I dive into a review of the individual assets, I want to start with a discussion about safety. Most important thing we do each and every day is ensuring our people get home safe. As a core value for SSR Mining, this has always been a focus.

We are continuing to drive increased leadership engagement and implementing simple tools to enable our people. While this is an improving, this is improving safety, it is also improving the quality of work and results in the field, as safe production delivery is an integrated approach to our long-term success. Now on to Çöpler. The mine delivered third quarter production, 57,000 ounces, at an AISC of $1,378 per ounce, reflecting the planned maintenance shutdown that was successfully completed in the quarter. As Eddie has noted, we received first production from Çakmaktepe Extension in the quarter, in line with our internal timelines, and we continue to expect the project will contribute 10,000 ounces-15,000 ounces to Çöpler's production total in the fourth quarter.

We've already spoken to the excitement around the future of Çakmaktepe Extension, and we're currently now hard at work translating that excitement into an updated life of mine plan for the operation. While the opportunity to add additional processing capacity at Çöpler has the potential to meaningfully improve the life of mine cash flows at Çakmaktepe Extension, the installation of that additional equipment will delay the ramp up to full production levels until later in 2026. We will continue stacking oxide ore to the heap leach pads over that time, but at a lesser rate than what was anticipated in the 2021 TRS. More details on Çakmaktepe Extension and the overall Çöpler expansion program are forthcoming in the updated technical report that will be released alongside updated multi-year guidance in the first quarter of 2024.

Exploration work has also continued across the Çöpler district, including at regional targets like Mavidere, where we expanded our ownership to 80% in Q4 of 2022. Çöpler has had more than 20 years of mine life since 2016, which is a testament to our continued success replacing depletion and still expanding the resource base. With a full suite of near and longer-term growth opportunities across the district, we believe there are opportunities to continue this track record of mine life extension going forward. Marigold. Marigold produced an impressive 83,000 ounces in the third quarter. This is a quarterly record for the operation in its more than 30 years operating mine life.

At an AISC of $1,106 per ounce in the quarter, this reflected the planned reduction in spend after a capital-intensive first half of the year. As we have noted, we focused on delivering our consolidated full-year production guidance, some of Marigold's fleet, originally scheduled for waste stripping at Red Dot, was reassigned to ore mining at the Mackay Pit. As this resequencing is incorporated into our 2024 budget forecast, we expect initial production from Red Dot will be delayed to the second half of 2024, defer, and also deferring associated production into 2025 and 2026. This work will be incorporated into the updated life of mine plan for Marigold, which will also be presented alongside our multi-year guidance in the first quarter of 2024.

Initial review of the ongoing technical work completed at Marigold suggests our near mine exploration programs were successful in replacing depletion. The refreshed life of mine plan will incorporate first contributions from New Millennium, and we are also evaluating the potential to include a first mineral resource statement for the Buffalo Valley target at the southern end of the Marigold property. These growth and mine life extension targets are, again, a reminder of the low capital intensity, near mine organic growth inherent across our portfolio. Moving on to slide 12, we'll talk about Seabee. Seabee's third quarter production was an improvement over the first half results, but also reflected planned downtime as a result of upgrades to the regional power grid.

The mine produced 20,000 ounces of gold at AISC of $1,382 per ounce in Q3, and we expect further improvement from this level in the fourth quarter as mine grades are expected to average between 6and 7 grams a ton. Overall, however, it is important to note, Seabee's mine plan does not forecast the very high grades we have encountered in the Santoy ore body over the last few years ahead. With increased contribution to the more medium-grade Gap Hanging Wall area in 2024, we expect Seabee's mine grade to be aligned with our mineral reserve grades and drive annual run rate production of approximately 80,000 ounces going forward.

As you have seen, we have some very exciting medium-term growth potential from the Porky targets on the horizon, and technical work is now underway to evaluate opportunities for these targets to be presented in a new mining plan for the Seabee in future. In the near term, we are focused on improving operating efficiencies and delivering increased mining and milling rates to ensure positive free cash flow generation, despite the new grade paradigm for the operation. On to slide 13, with Puna. Puna once again delivered an outstanding quarter with 2.6 million ounces of silver production at AISC of $13 per ounce, as the processing plant averaged record throughput of 4,900 tons per day.

It is a testament to the team and their focus on continual improvement, that they're able to deliver this level of performance and cost control despite the period of currency volatility in Argentina. Exploration continued in the third quarter, and we are pleased to highlight some very high-grade assays at the Cortaderas target, including a 190-meter intercept at 155 grams per tonne silver and 10.6% zinc. As we continue to evaluate opportunities to extend mining life from Chinchillas open pit in the near term, Cortaderas is presenting itself as a very compelling medium-term mine life expansion target going forward. Moving on to slide 14 now to discuss Hod Maden. After closing the acquisition in the second quarter, we now commenced initial earthworks and site preparations at Hod Maden.

As part of our preparations towards construction, we began infill drilling program in the quarter, and with the goal to de-risk the initial years of the mine plan. There are only three holes have returned assays to date. It is encouraging to see the world-class nature of the ore body affirmed with a highlighted intercept of 17 grams per ton gold and 1.6% copper over 90 meters. Mobilizing the project execution team is well advanced, and includes bringing a number of key members of the Çöpler Sulfide plant construction team over to Hod Maden. As a reminder, Hod Maden is expected to average life of mine production, nearly 200,000 ounces per annum, gold equivalent ounces, at AISC below $600 per ounce.

At our 40% stake, we expect the mine will contribute an average annual free cash flow of more than $65 million to SSR. We're thrilled to have a development project of this caliber in our portfolio, and continue to advance towards a construction decision for the project mid-next year. Now I'll turn it back over to Eddie

Edward Farid (Chief Corporate Development Officer)

Thanks, Bill. As you have heard, we are clearly excited about the future of our business and don't believe that today's share price performance reflects this. We are on track for a strong fourth quarter to achieve both production and cost guidance targets, and we expect to present a comprehensive portfolio update in the first quarter of 2024, including refreshed technical reports at Çöpler and Marigold, updated mineral reserves and resources, and an optimized multi-year guidance profile. While we are entering a period of reinvestment, it is important to note that our portfolio of growth projects features some of the highest returning, lowest capital intensity projects in the sector. Hod Maden, a truly world-class ore body with first quartile costs and a compelling IRR in excess of 30%, will move towards construction mid-2024, and we expect the project to deliver first production in 2027.

At our flagship Çöpler mine, we delivered first production from the Çakmaktepe Extension project just six years from discovery and for less than $70 million in capital. We see potential to expand the project's existing 1.7 million estimate over base and meaningfully improve gold recoveries for incremental capital investment. At Marigold, New Millennium and Buffalo Valley are showing potential as low CapEx mine life extension opportunities, and you have also seen meaningful exploration success at growth targets at both Seabee and Puna. We have the balance sheet to advance this multitude of growth projects and see potential for meaningful expansion to our production profile as a result. Combined with our track record of building assets successfully, the business is well positioned to deliver value to our shareholders.

At the same time, we will not stop our relentless efforts to drive costs out of the business and will also continue to return capital to our shareholders alongside investment in our organic growth pipeline in the near term. We have a proven track record delivering high return growth projects and are excited to continue building on that strong reputation going forward. With that, I'll turn the line back to the operator for any questions.

Operator (participant)

Thank you, Mr. Farid. 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 are 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 Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu (Executive Director)

Thanks, Eddie, Alison, Bill, and Alex. Maybe my first question is on your 2024 let's call it guidance. As you mentioned, you know, 2024 production is gonna be lower year-over-year. And thanks, Eddie, for giving us a bit of guidance in terms of 10%-15% below previous guidance. But could you clarify a little bit? Is it 10%-15% based on the mid-range of the previous guidance, which was 670-750, or is it 10%-15% below the lower end?

Edward Farid (Chief Corporate Development Officer)

Yeah, thanks, Cos. It is 10%-15% to both the lower end and the high end of the range.

Cosmos Chiu (Executive Director)

Got it. Okay. And then, looking further ahead, I'm just, you know, taking some of your commentary here. It sounds like, you know, with Çakmaktepe, the grind and leach potential, it's not gonna reach production until, or full production or full potential until 2026. However, it sounds like at Marigold, Red Dot, could come in in 2025. So I'm just wondering, you know, the lower production, is it contained to 2024, and we should see hopefully 700,000 ounces potential again in 2025, or are we talking multi years in terms of, you know, potentially lower production than what we had previously thought about?

Edward Farid (Chief Corporate Development Officer)

Yeah, thanks. Thanks, Cos. Look, we're obviously still working through and completing the in-progress technical report summaries, and we're continuing to complete the work on our infill drilling, the metallurgical test work, and the trade-off studies, and finalizing the pit shell optimizations. So I'm unable to give you a exact sense of the relative production profiles on an annual basis. However, what I would say is, the inflection point for the operations and for the production profile, really will come into play as the grind leach circuit comes online, combined with Hod Maden coming online.

Cosmos Chiu (Executive Director)

Okay. And then on that, the grind and leach circuit, I guess you've talked about that in the past, but you didn't really talk about that in Q2, but, you know, you've talked about that in Q3 again. You know, could you maybe talk about, you know, what the potential CapEx need might be, and is that, is that a go? Like, is that it sounds like it is. It sounds like you're pretty committed to it, but it also sounds like you haven't made the final decision yet. So I'm just trying to get a sense in terms of where we're at on that decision point at this point in time.

Edward Farid (Chief Corporate Development Officer)

Yeah. Look, we'll, it is a high probability we do pursue the grind leach circuit. Obviously, we are finalizing the technical reports, and with the release of the technical reports and the full definition of the economics, including the capital estimate and the returns, the decision will be made to pursue the grind leach circuit. That is part of the work that is currently undergoing. We do not, as we look at our capital profile over the next three years, we do not expect a significant departure from what you already have incorporated into your estimates. Because the grind leach circuit capital would be prioritized over investment into C2, which would be delayed.

And so it would come into play in place of the C2 capital that would have been deployed over that same period of time, plus or minus the refinement of the capital estimate in the technical report.

Cosmos Chiu (Executive Director)

Great. And that, you know, leads well into my next question in terms of, you know, you talk about three-year growth capital investment period, but at the same time, you say, you know, capital and low, L-O-W, low capital intensity, high return organic projects. So for those investors are somewhat concerned about CapEx, and I see CapEx was $123 million in terms of budgeted in 2023. I guess my question is: Should we be concerned about CapEx? Is it gonna go higher than 2023, or is it, you know, right now, I've modeled actually lower in 2024. Should I be concerned at all about any kind of CapEx increases due to your comment on a three-year growth capital investment period?

Edward Farid (Chief Corporate Development Officer)

Yeah, look, as I look at the next three years, you know, the market is fully aware of a lot of the large chunks of capital ahead of us. So we have Hod Maden, which we are responsible for 7% of the capital estimate for. We have the grind leach circuit, which we just covered together.

Those represent the largest components of the growth capital associated with our growth profile in the coming three years.

Again, I do not believe that the market will be surprised as they look through the outcomes of our technical report estimates, which will-

Cosmos Chiu (Executive Director)

And then-

Edward Farid (Chief Corporate Development Officer)

—you know, fully define all these figures to a higher level of fidelity.

Cosmos Chiu (Executive Director)

Of course. And then maybe one last question, Eddie. In terms of CapEx for Hod Maden, it sounds like, you know, you're gonna make a decision by mid-2024. So in your budgeting and the studies that are coming out in the guidance for 2024, we should expect some kind of Hod Maden number for 2024, right? For CapEx.

Edward Farid (Chief Corporate Development Officer)

Yeah. Let me pass that over to Alison, to cover.

Cosmos Chiu (Executive Director)

Great. Hi, Alison.

Alison White (CFO)

Hi, Cosmos. Thanks for the question. Yes, we will definitely be including the CapEx expected for Hod Maden when we issue our guidance in the upcoming year. You can anticipate that it will be released at that time.

Cosmos Chiu (Executive Director)

Great. Thanks for answering all my questions, Eddie, Alison, Bill, and Alex, and I'll pass it on.

Edward Farid (Chief Corporate Development Officer)

Thanks, Cos.

Alison White (CFO)

Thank you.

Operator (participant)

The next question comes from Ovais Habib, with Scotiabank. Please go ahead.

Ovais Habib (Precious Metals Analyst)

Hi, Eddie, and SSR team. I guess, most of my questions have been answered, but a couple of follow-up questions asked by Cosmos. At Marigold, now, obviously, you know, you're looking at deferring stripping at Red Dot into 2024. Does that also mean that AISC could be kind of first half-weighted for 2024? I know you're not giving, giving guidance yet, but any kind of color on that would be appreciated.

Edward Farid (Chief Corporate Development Officer)

Yeah, sure. Look, I'll pass that over to Bill. What I'll say is, given Red Dot is second half-weighted, production is likely going to be weighted further to the second half, in 2024 on Marigold. But let me pass it over to Bill for more color.

Bill MacNevin (EVP of Operations and Sustainability)

Yeah. Yeah. So, with a lower production profile, the AISC will go up commensurate. But along with that, we're doing a lot of work associated with improving and with some good success associated with improving the productivities associated with the fleet. So, we're actually improving on a lot of fronts, the spend profile at Marigold. But we'll definitely see the AISC come up with that reduction in gold production for the year. No surprises with that.

Ovais Habib (Precious Metals Analyst)

So, Bill, just on-

Bill MacNevin (EVP of Operations and Sustainability)

Make sense?

Ovais Habib (Precious Metals Analyst)

Again on. Yeah, that, that makes sense. So at Red Dot, like, I mean, how much more additional stripping is kind of required at Red Dot? And, I mean, in terms of tons or in terms of, kind of maybe in terms of quarters, can you give us some color as to, you know, what needs to be in place going into 2024 to complete Red Dot? Will it be done by, I guess, the second half, or is that gonna continue into second half?

Bill MacNevin (EVP of Operations and Sustainability)

It'll be the middle of 2024, we get into the ore zone, first major ore zone proper. So essentially, we're delayed, say, a quarter and a half. And that tonnage was just directed to another part of the mine, supporting this year's production. So in other words, it's nothing's changed in terms of the profiles or anything. It's just about a quarter and a half of stripping.

Ovais Habib (Precious Metals Analyst)

Got it. I appreciate that. And then just switching gears to Çöpler at Çakmaktepe. As you wait for a decision on grind leach circuit, are you looking to continue mining and stockpiling, or will you defer essentially all mining to mid- to late 2025?

Bill MacNevin (EVP of Operations and Sustainability)

We'll still continue mining. We just won't be mining at the rates that were projected previously. So we won't be increasing the mining rates to the rates we projected before, but we will continue mining. And that ore that's coming out between now and when we talk about that potential plant expansion will be going on to the heap leach as previously planned.

Ovais Habib (Precious Metals Analyst)

Got it. So that's it for me, guys, and thanks for taking my questions.

Edward Farid (Chief Corporate Development Officer)

Thanks, Ovais.

Operator (participant)

The next question comes from Michael Siperco with RBC Capital Markets. Please go ahead.

Michael Siperco (Director of Global Mining Research)

Hi, guys. Thanks for taking my question. Yeah, a lot of my questions have been answered as well. Maybe, maybe just, and I know you don't want to do this necessarily, but I'm struggling a little bit with the 10%-15% that you mentioned in 2024. Can you put it in context a little bit in terms of the split between Çöpler and Marigold, in terms of where the bulk of the impact will be? And I assume that there will be an impact on Marigold's guidance versus the prior outlook. Is that fair to say?

Edward Farid (Chief Corporate Development Officer)

Yeah. Look, look, look, Mike, I think, it's a bit early, until we release our guidance targets to give you the exact split of ounce impact. That'll have to come through, as our technical reports are finalized and our budgets are closed out. That being said, if you thought about, Çakmaktepe extension as a 90,000 ounce per year run rate operation, and you took a discount to the amount of ounces being produced there annually, and then a delay of half a year out of Red Dot, it should begin to give you a sense that, you know, the distribution, you know, is, is largely, I can't give you an exact percentage, but certainly split, between both operations and burdened by both operations.

Michael Siperco (Director of Global Mining Research)

Okay, that, that's helpful. That was gonna be my, my follow-up on Çakmaktepe, and the contribution expected for, for next year. So would it be fair to say, I, I think the guidance was 15,000-20,000 this year. Would, would that be a fair sort of run rate to look at for ongoing operations at Çakmaktepe in 2024?

Edward Farid (Chief Corporate Development Officer)

Yeah. This year, the Q4 is gonna operate at 10,000-15,000 ounces is the target. Next year, we are currently still working through what I'll call as the trade-off studies of how much, in terms of production, gets contributed from Çakmaktepe and gets placed on the leach pad. The key again here, and I'll make sure we reiterate it, is that with Çakmaktepe, there's a 1.7 million ounce reserve. That reserve has grown substantially as we have continued our drilling, and both our step-out drilling and our infill drilling, converting some of the resources to reserves.

That is what's triggered this decision to build the grind leach circuit, because at the moment, all these ounces are going to be stacked at, on the heap leach pad and get recoveries in the range of 60%. By installing a grind leach circuit, we could get recoveries north of 80%, and as you think about the quantum of ounces there, it's NPV accretive for us to do so. And so we may be sacrificing a slower, you know, or taking on a slower ramp-up at Çakmaktepe in exchange for NAV accretion. And so what we're doing right now in the trade-off studies is seeing how many ounces that we should stack at the moment, and how many ounces are going to go through the grind leach circuit.

And so hopefully within the coming two months, you will have a very good picture as to what that distribution is.

Michael Siperco (Director of Global Mining Research)

Okay, that makes sense. So it's not so much you're looking at whether or not to do it, it's the, I suppose, the pace of putting material on the heap leaches versus the longer-term NAV appreciation from running them through the plant that you're looking at. Is that, did I hear you right? Yeah. Okay. Is there still a scenario being considered where you could see, let's say, full speed production on the leach pads for the next couple of years while you get the expansion done at the plant? Or is that something that's already been tossed as a consideration?

Edward Farid (Chief Corporate Development Officer)

Look, the preliminary work we're seeing at the moment, and again, this is work in progress, indicates that it is more accretive to wait for the grind leach circuit to get to full run rate levels. As that work is tied up, if the conclusions change for any reason, certainly we'll evaluate the other option. But at this stage, we're working under the impression that we'll be building the grind leach circuit.

Michael Siperco (Director of Global Mining Research)

Okay. Last one for me: Just comment on if we're talking about 2024 now, any comment on Seabee, given the lower production this year? Should we expect an impact versus the 2024 outlook for Seabee as well?

Edward Farid (Chief Corporate Development Officer)

Yeah. Let me pass that over to to Bill.

Bill MacNevin (EVP of Operations and Sustainability)

Yeah, I think I made reference to the fact that Seabee's been a fabulous mine, particularly in the Santoy area. Whilst we're continuing to mine there, and we're continuing to do some exploration, we see ourselves on the edge, and that's where the higher grade was coming from. What that will mean is a reduction. We expect to stay around that 80,000 ounce mark, and what we're doing is we're ramping up our mining rates and ramping up our processing rates to keep it at those levels. That is a slight reduction versus what we were projecting last year. I think it's down about 10. We're completing that work at the moment to pull it together, but it will be a reduction, but not major.

Michael Siperco (Director of Global Mining Research)

Okay, great. Thank you very much, all.

Edward Farid (Chief Corporate Development Officer)

Thanks, Mike.

Operator (participant)

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

Edward Farid (Chief Corporate Development Officer)

Thank you, operator, and thank you to everyone for participating. Have a great day.

Operator (participant)

This concludes today's conference call. You may disconnect your lines. Thank you for participating.