SSR Mining - Q4 2023

Transcript

Operator (participant)

Hello everyone, and welcome to SSR Mining's fourth quarter and full-year 2023 financial results conference call. 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.

Alex Hunchak (VP 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 brief review of our fourth quarter and full-year financial results. Our 2023 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. 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. 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 measure. Rod Antal, Executive Chairman, will lead today's call. I will now turn the line over to Rod for his opening remarks.

Rod Antal (Executive Chairman)

Thank you, Alex. I'm going to speak to the ongoing situation at Çöpler. Firstly, I want to pass on our deepest sympathies and condolences to the families, friends, colleagues, and communities of the nine personnel who remain missing. This is an incredibly difficult time for everyone who has been impacted by the incident, and we are still processing this tragic loss. It will be for some time. In a sign of respect, I would like to take a moment of silence. Thank you. I'm sure you can appreciate that the situation at Çöpler is dynamic, and while I will provide some detail today, there are many more questions you may have that I'm not able to answer at this time. I would appreciate your understanding during the Q&A. The focus of the discussion today will be on the incident itself and the activities and priorities at Çöpler at this time.

So let's walk through the facts as they currently stand. At approximately 6:30 A.M. Eastern Time, on the 13th of February, a significant slip occurred from the heap leach pad, with an estimated 18-20 million tons sliding into the Sabırlı Valley and the Manganese Pit. All operations at Çöpler were immediately suspended. It was confirmed that nine personnel were unaccounted for once the confirmatory headcounts were completed in the hours following the incident. Immediate efforts were focused on safely conducting search and rescue. Various government agencies were immediately deployed to Çöpler, including the search and rescue teams. Instead, we have been supporting the activities at site under the direction of the various government agencies. I would like to recognize and thank the Turkish authorities for their rapid response and overwhelming support to date.

Rather than repeat all the details contained in the press releases that are available on our website, let me summarize the current situation and focus at Çöpler. The immediate focus was on the search and rescue efforts. This was initially suspended due to the instability of the heap leach pad, but efforts to locate the personnel have since resumed. Our priority is to safely recover and return our people to their families. In addition, efforts have been focused on three other areas. First, to agree on and initiate a plan to stabilize the heap leach pad, allowing work to safely continue on the recovery of our missing people. Initial work began on February 23 to stabilize portions of the heap leach pad, and extensive monitoring is taking place using drones and radar.

The work to determine the final overall plan and approach to stabilize the pad, including the use of remote equipment, is continuing to advance. Second priority has been on the containment of the Sabırlı Creek area. In this regard, the containment pond immediately constructed and the installation of a concrete curtain at the bottom of the valley is underway. Water diversion systems at the top of the Sabırlı Valley are also underway. The Turkish government is conducting environmental monitoring of surface water, groundwater, soil, and air quality in the region. Public comments from the Turkish government to date indicate that test results have been negative with respect to potential contamination in the locations being monitored. These results are preliminary and additional testing will continue. Finally, and number three, is the ongoing discussion with the various government ministries to determine the permanent storage location for the heap leach material.

Moving on to just a few other facts. As a result of the incident, the Çöpler EIA has been revoked. Six personnel are being detained and are facing charges in relation to the incident, and we're ensuring they receive the necessary support while respecting the Turkish legal process. Investigations led by the Turkish government are underway to determine the causal factors leading to the slip. We expect this to take some time to complete and until then, have no further comments to make. As we look ahead, we continue to work closely with government officials and regulators, and we'll update the market as facts present themselves moving forward. With respect to our financial results, given a lot of the information was pre-released with the technical reports on the 13th of February, I intend only to highlight a couple of key points.

First, the business ended 2023 with a strong liquidity position, with total cash of $492 million, no near-term debt maturities, and continued cash flow generation from our three other operations. Looking forward, the Çöpler incident will have an impact on our financial results in 2024. We continue to evaluate and assess these potential impacts as laid out in today's 10-K filings. In the first quarter of 2024, and as noted in the 10-K, we anticipate recording an impairment of the heap leach inventory directly impacted by the Çöpler incident, and we'll also evaluate the Çöpler long-lived asset group for any additional impairment. Given the uncertainty surrounding these items, we are taking some steps to preserve our cash position until we have more fidelity around the forward-looking cash requirements of the business.

As a result, we have suspended our quarterly dividend and automatic share purchase plan we put in place last year. Given our focus is on Türkiye, is on Çöpler, we have also temporarily placed further investment at Hod Maden on hold at this time. We will revisit the timeline and approach in due course. This has obviously been a very difficult time for everyone impacted by the events of February 13, and we are doing everything we can to support our colleagues and the various stakeholders on the ground in Türkiye. Clearly, we are in a period of some uncertainty, and there is no doubt that we have some challenges ahead as we focus on the recovery efforts at Çöpler. In the meantime, operations are continuing at Marigold, Seabee, and Puna.

As I turn the line back to the operator for any questions, I will again note that I'll keep the discussions on the incident to my prepared remarks. That said, we will do our utmost to answer questions related to the 2023 operating and financial results of the other properties. Operator, please go ahead with questions.

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 Don DeMarco with National Bank Financial. Please go ahead.

Don DeMarco (Precious Metals Equity Research Analyst)

Thank you, operator, and good afternoon, Rod and team. First, my condolences to everyone with the company, and in particular, the missing personnel and their families and colleagues. Now, Rod, I don't want to overstep what your intentions were for this call, but maybe if you could just clarify: did you want no questions on the Çöpler incident, or am I able to ask a few questions to get additional color on some of the points that you made?

Rod Antal (Executive Chairman)

No, Don, you can ask questions. I just be respectful to the fact that the incident is only two weeks old, and you know, clearly, we're focused on those areas that I mentioned in the call, but I'll do my best to answer anything else.

Don DeMarco (Precious Metals Equity Research Analyst)

Thank you. Is there any chance that the, the slip could you talk about your insurance? Is it, does the potential that the slip might be insured?

Rod Antal (Executive Chairman)

As a normal course, we have notified our insurers of this slip, and I will continue to work with them in the ordinary course as the, you know, final investigations and facts come to hand. But at this stage, I've been notified.

Don DeMarco (Precious Metals Equity Research Analyst)

Okay. And so as you described, there's one of the big efforts right now is in containing the extent of the contamination. There's a big earthworks process underway. Do you have any sense about the cost per ton to move the material? And is the material accessible, or are there parts where some of this slipped heap might be difficult to reach, given steep slopes and other factors?

Rod Antal (Executive Chairman)

Yeah. At this stage, Don, there's really no fidelity around the numbers. I'll just tell you what the areas of focus are for us is. We continue to work actively on the heap leach pad stabilization. That's really the key priority, so we can continue with those efforts to recover the missing people to return to their families. The containment area around the Sabırlı Valley in particular is well advanced, as I mentioned. And we'll continue until we've finished that work.

And then really, the last piece around the final area for the material to be placed is really only just, only really just got underway, so too early to put any more color on that.

Don DeMarco (Precious Metals Equity Research Analyst)

Okay, fair enough. And then maybe just as a final question. In the release this afternoon, it mentioned that there's a potential impairment charge in Q1, and it stated $73 million, and it referenced that that makes up 19% of the Çöpler total gold inventory. Just wanna clarify, does that represent 19% of the heap leach gold inventory or the total heap leach and sulfide gold inventory?

Rod Antal (Executive Chairman)

It is a total of both the oxides and sulfides, Don. Mm-hmm. So it's all, all the inventory at Çöpler.

Don DeMarco (Precious Metals Equity Research Analyst)

Okay.

Rod Antal (Executive Chairman)

The amount that we're referring to is the oxides.

Don DeMarco (Precious Metals Equity Research Analyst)

Okay. Thank you for that. Once again, my condolences to the SSRM team and everyone involved. Put it back to the operator.

Rod Antal (Executive Chairman)

I really appreciate that. Thank you.

Don DeMarco (Precious Metals Equity Research Analyst)

Back to you.

Rod Antal (Executive Chairman)

Thank you, Don.

Operator (participant)

This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Antal for any closing remarks. Please go ahead.

Rod Antal (Executive Chairman)

Great. Thank you, operator, and again, thank you all for joining us. Goodbye for now.

Operator (participant)

This concludes the conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.