Q3 2020 SSR Mining Inc Earnings Call
Good afternoon, everyone and welcome to assess our mining third quarter 2020 conference call. This call is being recorded.
At this time.
I would like to.
The call over for opening remarks, and introductions I'd like to turn the call over to Michael Mcdonald Investor Relations for EPS, which are mining. Please go ahead.
Thank you operator.
Afternoon, ladies and gentlemen, welcome to SSR by an age third quarter 2020 conference call during which.
Sure I will provide an update on our business and a review of our financial performance.
Financial statements and management's discussion and analysis have been filed on SEDAR Edgar the assets and are also available on our website.
Accompany our call there's an online webcast and you will find them.
Relation to access the webcast in our news release relating to this call. Please.
Please note that all figures discussed during the call are in us dollars unless otherwise indicated.
All references to cash costs and all in sustaining costs are per payable ounce of metal sold.
We will be making forward looking statements today.
So please read the disclosures in the relevant documents joining.
Joining us on the call. This morning are right ankle President and CEO, Greg Martin, our CFO and Stewart Beckman COO.
Now I would like to turn the call over to Rod for opening remarks.
Thanks, Mark and good afternoon all.
Very pleased to welcome you to our first quarterly call following the completion of the merger.
With a lesser today, we were discussing third quarter 2020, operating and financial results.
It's so good to finally be talking about the new which is Ah.
And I'm privileged to be leading the company into its next chapter and.
And having the opportunity to work with an exceptional team.
Building from our larger and fundamentally strong business, we have an exciting opportunity to firmly establish SSR as the premier mid tier gold producer for the long term.
Our journey is just beginning and I fully expect that our portfolio will deliver a number of attractive growth options in the future.
The third quarter was an eventful one for resi as a firm navigating the global impact the Cogs at 19 pandemic close.
Closing the zero premium merger with a lag.
Gold and ramping out by CB and tuna back to full capacity post the cobot shutdowns.
Hi, its merger, we have a very strong and diversified asset buys across four operating jurisdictions.
In 2020, we will produce between.
290, 760000 ounces of gold equivalent.
After allowing for the impacts of carbon.
We have I got right now for me an ounces of gold equivalent reserves, which puts the our weighted average mine life in excess of 10 years with Turkey, providing long GBT.
You have around 20 years.
We are in a p., leading position due to our asset quality and low capital intensity growth going forward.
We have a clear focus on free cash flow that will influence every major decision we might.
I only use free cash flow generator.
Generation going to.
To be strong, but our starting point on the balance sheet is excellent with over $770 million the consolidated cash.
Our exploration portfolio is easy easy extensive.
We have a number of organic growth options into portfolio with over 20 knee mine and Standalone expert.
<unk> opportunities currently active.
Over the next few months, we have a number of value enhancing catalyst plant.
The first will be the upcoming chip a technical report, which will provide a brief first view of the sulfide operations and demonstrate a long GVT too.
Oxide Gold productions, a chip look in.
In addition, we plan on providing a number of portfolio wide exploration updates on our greenfield and brownfield initiatives before year end.
The last point to Mike is our integration efforts are on track and largely completed.
We were fortunate that there was a close cultural alignment that has helped streamline the combination.
Our team has done a tremendous job in a challenging time to bring the business together and I want to recognize them for their efforts that have gone above and beyond our normal high expectations.
[noise].
As 2020 draws to a close we are firmly focused on delivering site production and driving to a strong finish for the year.
So turning to the next slide.
He is GE has always been ingrained in the culture of both SSR and Alaska.
Kelly.
Forward, we can leverage the enhanced strength as a combined team to continue to do the right things and be recognized as a true partner to our employees and the communities where we operate.
We have several different programs across all our operating sites.
There are too many programs to call out today that will with luck.
Highlight too.
The first is the continued investing in our local communities through established social development funds, where we are building capability and establishing sustainable businesses that are not dependent on the minds.
And second.
Investing in schools and academic scholarships with.
A particular focus on encouraging local and female representation.
From an environmental perspective, we held our sales in high regard.
And to a high standard we have many examples of best practice like being the first man in the world to be certified under this.
But on management code and Marigold.
We are proud of our achievements and will continue to be a leader in our approach to its Jay.
Moving onto the next slide.
With respect to carve it 19, we are focused on the protection of our employees and the local communities in which we operate.
Sorry.
I see and to know what Robbie shut down for a period, well marigold and checked law have been successful in navigating through kind of it though we had to adjust our operating plans along the way as circumstances dictate it.
All our operations continue to work with national and local authorities.
For accordance with applicable regulations and remain vigilant with respect to onsite activities.
We have implemented numerous mitigation measures things such as testing quarantining, ensuring physical distancing and providing additional protective equipment.
We are operating.
Our corporate offices at a reduced capacity with all employees through working remotely.
Moving onto slide number six.
A few quarterly highlights before diving into the details.
Operationally, we had a solid third quarter and are on track to meet our updated 2020 production annual.
The all in sustaining guidance on the back of what is shaping up to be a strong fourth quarter goal.
Gold equivalent production from all operations for the first nine months in 492000 ounces with a 164000 ounces produced in the third quarter.
Our quarter three Olin system.
In costs was a thousand and $34 per ounce.
Trippler Marigold continued to operate reliably with tuna in CV now back to steady state.
On the growth front, we are busy on a number of fronts from continuing exploration drilling.
At a number of targets.
To follow to finalizing the chip for district Technical report.
From a financial perspective, we ended the quarter in excellent position, we consolidated net cash of $315 million and anticipate a strong fourth quarter with robust free cash flow to the end of the year.
Moving on to slide seven.
I'm delighted to announce a corporate dividend policy beginning in quarter one 2021.
We have been very thoughtful on air in our approach to capital allocation.
Our capital allocation strategy going forward is to balance the continued investment in high.
Growth, while maintaining p., leading financial strength and providing sustainable capital returns to our shareholders.
While our recurring quarterly dividend is expected to be the primary method of capital return.
We will premier optically evaluate supplementing these dividends from excess trailing free cash flow.
With that I'll turn the call over to Greg, who will discuss our financial performance in more detail.
Yeah.
Thanks, Rod and good afternoon to everyone.
This is definitely an exciting time for SSR.
I joined when we were a company with a single asset in Argentina and to go forward.
In addition to the top end of the mid tiers with four strong assets and one of the best balance sheet in a business, it's a great opportunity.
Overall, I'm quite pleased with our third quarter.
Even though CB and tune operations were interrupted for part of the quarter, They contributed well with Marigold solid.
And chip, they're coming in strong over the quarter.
As you will have noted from our statements we only recognize the operating and financial results for chip blare within our consolidated statements for the two week period post the September 16th transaction close date.
Within that context revenues totaled $225 million with income from mine operations totaling $83 million.
[noise] attributable net earnings totaled $27 million or 19 cents per share.
Each of these financial metrics.
[noise] increases relative to the comparative quarter.
I will talk about a number of factors related to the transaction that impacted our quarter shortly but adjusted net income of $68 million or 49 cents per share is an impressive start for the merged company with all for us.
It's contributing to that result.
Cash from operating activities was $44 million with notable items being catch up cash tax payments as COVID-19ien related tax deferrals expired.
Working capital build up as tuna resumed concentrate sales.
Sales and the settlement of payables and accruals acquire into the Elas are transaction.
Like many of our peers one of the principal impacts of Covance has been the necessity to defer cap.
Capital projects to reduce risk of contractors interacting with our operating staff.
Well that situation has somewhat normalized it will push some capital spend into 2021.
Publishing these first quarterly statements of the new SSR really highlights one of the features of the merger.
An exceptionally strong liquidity position to drive our strategy.
Concern.
Elevated cash totaled $773 million with net working capital over $1 billion.
We have a strong net cash position and well structured low cost debt. So the balance sheet is in great shape and will get better.
So let me briefly.
Discuss the financial statement impacts of the merger.
The most apparent is that transaction and integration costs, we incurred in the third quarter of $15.7 million.
This accounts for the majority of costs, we expect to incur with the exception of certain limited integration costs.
Yes, it will carry forward through the next couple of quarters.
The merger is accounted for as an acquisition of a last served by SSR.
As a result, we recognize the assets and liabilities of Elas are at fair value on the date of acquisition.
This has the result.
Increasing the book value of mineral properties and current assets to fair value as described in note four to our financial statements.
Future cash flows are not impacted by the resetting to fair value, but future earnings are.
The assets impacted were in.
Tories finished goods leach pad inventories and sulfide ore stockpiles.
As these assets are processed the associated production costs will increase reflecting this recognition at fair value.
This was evident in the third quarter as we sold the gold inventory.
Into acquired and produced from the heap Leach.
You will note a $19 million increase to production costs, principally due to these impacts.
Finished goods is a one time impact, but heap leach will carry forward for a number of future corners and the ore stockpiles.
Which equate to over two years of plant throughput.
Impact certain periods over the mine life as they are processed.
Finally, the mineral reserves see a significant fair value bump in this case just under $1 billion.
So as we mine and process these down.
Koreans, we will incur additional depletion expense of approximately $180 per ounce.
So as mentioned earlier, all noncash impacts, but important to understand in estimating future income.
Next it gives me a lot of satisfaction that we can announce the first.
First dividend for the merged FSR commencing in the first quarter of 2021.
It is strong evidence of the strength and maturity of our business.
The base quarterly dividend will be five cents per share representing an annual yield of approximately 1%.
While this recovery.
Some quarterly dividend is expected to be the primary method of capital return.
We'll periodically evaluate supplementing this dividend from 12 month trailing excess free cash flow in the form of incremental dividends and share buyback programs.
I have confidence the outlook for.
Were able prices and our business will provide significant opportunity for capital returns as we continue to deliver shareholder value from the portfolio.
Finally, I look forward to a great fourth quarter.
We will have the contribution of Chuck blur for the full quarter and expect.
All four assets to close the year strongly in an environment of robust metal prices.
With those comments I'll turn the call over to Stewart, who will discuss our operational performance and organic growth in more detail.
Thanks, Greg otherwise I'll start with a comment on the health side.
If the environment community relations.
A considerable amount of energy abuse has been extended through and before the integration process to ensure that we manage touches the and the risk in the business.
Experience has shown us that in periods of change, we have distraction and risk.
It is added an overlay.
Of protocols and anguish to everything and Twentytwenty.
We have a well resourced and experienced high CESI and operations teams in HSR, who have managed to achieve impressive results over the years, our operations managers have done an impressive job of maintaining our high HSC standards, while managing the business.
In some cases restarting them in the coated world now.
Our safety metrics with disappointingly slightly down through the middle of the year, but are now improving.
Protecting and caring for our Paypal the environment and the communities underpins our business performance and we will continue to be a key focus.
And area of all of our teams each.
Each of the sites has a slightly different approach to dealing with cobot management tailored to the situation and the specifics of the site I am confident that all of the sites have taken a very strong and proactive stance against coated and our increasing protocols ahead of rising statistics.
In our brief comment on each of them on so lets please move to slide 10.
Chip has not had a direct interruption through the cobot pandemic there have been some indirect impacts, including some impact on production and pushing back of some work and costs into next year.
Through the first on months of the year.
Both oxide and sulfide plants produced a total of 224000 ounces of gold for approximately $214 million in pre tax free cash flow.
There have been some reductions in workforce as a result of quarantining, which have affected operations as a result, there was some.
Changes made to the mine plan to compensate.
Chip remains on track to achieve full year guidance.
The sulfide plant continues to operate at above design rights compensating for slightly lower than planned grade and recovery.
The change of the mine plan and should that the manganese pit cutback was completed on time.
We are now starting to them on the higher grade ore in the pit.
Hi, one was inspected during a brief plant shutdown in July and found to be in excellent condition.
The autoclave one shutdown previously planned for the second half.
Has now been pushed back to Twentytwenty, one there are no water Clive shut.
Downs plan for the rest of the year.
Exploration in the region and within the chip on them on area continues with encouraging results, which we plan to ship as soon as.
Along with the other targets that we've previously discussed our VP exploration hypothesize the presence of a porphyry intrusion relatively close.
Close to the ultimate bottom of the triplet mine pit.
Mid year, we started testing this target, which we've creatively named see too.
And having said intersected mineralization consistent with a porphyry intrusion.
We will share the data when the analysis in the queue I QC is complete.
Engineered.
Early works or the supplemental flotation plant advanced during the quarter. The flotation plant will increase the sulfide plant throughput and lower unit costs. The impact of the flotation plant is being incorporated into the upcoming Schaeffler District Technical report.
The updated technical report will also.
Hi contain a PE hi, outlining the preliminary development plan for outage as a reminder, outage is still being explored and the resource will expand the adage P.I. represents only drilling from twin up to 29 chain we.
We restarted drilling in.
In March or April of this year after a bit of a covert delight subsequent 2020 drilling confirms extension to the mineralization.
We will shortly provide an update of the exploration at adage, including both infill and step out drilling.
The technical report will be report released.
Before the end of the year after Finalization of engineering and business assessment and of course approvals.
Please move to slide 11, and we will talk about Marigold.
Marigold continued to operate through covert a great credit to the mine management.
And there have been indirect impacts.
Next that affect both 20 and 21.
Total material moved was another quarter above 20 million ton. Despite some teething issues with our new hydraulic shovel.
We believe these issues are now mostly behind us shorter hauls into next year will facilitate higher tonnage right. So the mine.
As expected.
The head grade increased in the third quarter versus previous quarters. Overall, we stack just over 73000 ounces recoverable in Q3 and expect to finish the year within guidance all in sustaining costs. At 12 43 took a hit from the increase in royalties as a result of the gold price.
As it did at all of the sites high gold prices are enormous problem Pat.
Exploration drilling continued across the property with some interesting results.
With land acquisition over the last few years, we are assessing the portfolio of opportunities across a very large package in the region.
Very.
Prospective areas on the edge of both mining areas and close to all tenement boundaries are some of the areas of focus obviously, we avoided sharing our excitement for these while we negotiated purchase the abiding areas.
We will provide some update on the Marigold tenement exploration in our group exploration update.
Slide of this year.
Please move to slide 12.
So it really is a great high grade mine with lots of potential.
From a health and safety perspective, we've been doing a lot of work to comply to comply with the new diesel particulate matter requirements stipulated by the province of sketch one.
This enroll.
With a lot of improvements to existing equipment.
As well as we recently started commissioning of a new ventilation rise and fans, which has made a very big improvement as designed.
As you know, we shop savvy down as a proportion for Cove. It. This action also pushed some working.
Capital into Twentytwenty one.
C B ramp backup in August and in September we had a record milling month.
Offer an average of 1200 71 tons per day. This included our best ever one day throughput of 1500 22 tons a day.
For perspective for the year.
Yeah that prior to assess our mining purchasing survey the mill averaged 760 tons a day throughput.
In the paper that was really subsequently in 2017 mill throughput was estimated to average 10 50 for the whole life of mine.
So the current throughput rights demonstrate upside.
Slide to the production profile.
The mine is currently bottleneck at Seabee.
There are also a real continuous improvement opportunities in the mine at Seabee and this will be an area of considerable ongoing focus we recently approved the replacement of an older Jumbo along with an additional jumbo for the mining.
Flight these purchases will come across the ice road in early 2021.
During the shutdown for co that there was a lot of maintenance of both processing facility and the mobile mining equipment.
Which will support productivity going forward.
CB has great exploration potential both immediately on store.
In the current mining areas and in the very large tenant package along with the contiguous Fisher tenements.
You may have seen that we recently satisfied and requirements at Fisher and are now 60% owners with an option to increase to 80% in the future.
We are looking to incur.
Strong exploration around the mine this year.
When we do the corporate exploration update later this year, we will update you on some of the interesting exploration results from CB and Fisher and from our productive summer program in Amrisc, which is about 50 kilometers to the south of CV.
Now please move to slide.
Great Attorney.
Turning to ramp back after a hiatus for cobot infection rates in Argentina, including the Corona.
Reached well into the 20% range that we've seen generally pretty low severity and few hospitalizations. Our team has done a fantastic job of our sliding them on.
There is of course, a cost of very tight cost controls.
The Montana plant have ramped back up really well and the plant is running regularly at above design throughput and recoveries. The tiling pumping system that causes some consternation last year now pays to be fully resolved in control.
On the back.
Silver prices and a low cost Turner is forecasting produce.
Good cash flow going forward.
And all in sustaining cost of $11 26 for the quarter. Despite the shutdowns in co that demonstrates the potential approval tuna.
Very excited excited to see what the team can deliver there.
We'll now move to slide 14.
I've covered off most of this already so in summary, our focus is on first operational discipline and continuous improvement to delivers from our tremendous operating assets secondary.
Leverage off efforts all organic growth.
Right portfolio.
With our immediate focus on converting some of the near mine low cost profile prospects into production.
You will get a look at the first phase over the next days when we reveal outage PPI in.
In the chair flood technical report in the next few weeks.
With that.
I'd like to close in the hand back to Rob.
Well, Thanks, Stewart and Greg.
So despite the challenges runners bark hybrid we've done an amazing job managing our operations completing the merger in integrating both companies into the new races.
The announcement of a dividend highlights.
Financial strength of the business and a responsible approach to capital allocation.
And finally, we're lining up a number of catalysts that will show the value and exciting growth potential from within our portfolio.
With that I'll pass along to the opera and take any questions you may have.
Yes.
Thanks.
Hello, operator.
Thank you 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 Tom acknowledging your request. If you are using a speakerphone. Please pick up your handset before question any keys to withdraw your question. Please press Star then Q2.
Hey, John a question. Please press Star then one now.
Our first question comes from.
Obese Habib of Scotiabank. Please go ahead.
Hi, guys and congrats on a good quarter.
Hi, Thanks for taking my questions.
Just a couple of quick questions from me.
Just starting off with the juniper, great to hear how well the auto club.
Performing.
You mentioned the autoclave shutdown is now auto club number one shutdown is now expected in Twentytwenty. One is this shutdown expected in the first half or second half of 2021.
We're scheduling I did in the first quarter at this point.
The first quarter and and I mean in terms of.
The shutdown that you saw in in.
The auto club number two.
You know in terms of how the while the ramp up has gone.
Is there any kind of optimizations or anything that you guys need to do within those all the clubs that you're seeing or is this just a routine shutdown that you're expecting in.
Sort of stuff.
Hi, this is through to the end shot that it's just the retained shutdown. The the main driver for this one will be the replacement of the agitated bites.
Because they're aware autumn and eventually that way that blasted.
Muslim with than we had expected to.
That were expecting to have to replace them right.
Per quarter.
And just then moving onto exploration drilling at our there John you mentioned that the recent drilling has started around the April timeframe.
Has that been mostly step out the infill and can you give us an indication as to any sort of preliminary results that outcome according to expectations.
Since.
Yeah. So the infill drilling confirmed what we expected to see and yields and then we've been stepping out around around the existing resource.
When we issued the when we issue the.
The update in the next few weeks, we're planning on breaking it out so you can see what's infill and.
And what steps have.
Okay, and just confirming none of this will be included in the study.
No no well the technical report as you know we have to pick.
They point in time, so we closed we closed we prepared the technical report Mrs. Subsequent sorry, it's all upside to what you'll see in the technical report.
Okay. Okay, and then just moving onto Seabee, and then I'll jump back into the queue, but.
In terms of CB throughput was was definitely you know you're hitting your track record.
To put levels.
Is that expected to be sustained at current levels going into Q4 and 2021.
And also can you give us any indication on what that stockpile grade for the 17000 tons is.
But the challenge the challenge for CV and the longer term is the is the mine Rob.
Plant. So we are putting some extra equipment and then my comment regarding the jumbos, So new jumbos.
There are some requests or some other equipment and we're working on.
Improvement plans to get the mine right up in order to be able to say tomorrow.
The mill feed the plant at a higher right.
So I'm not promising anything beyond beyond the numbers that you previously would have seen it will take a while for us to get some traction.
But there's definitely a good upside at Seabee.
So and then just any indication as to what.
Yeah, you can give us the information on the 70000 tons of stockpiled right.
It's it's a very small stockpile. It so it's pretty much just the wrong say, it's it's around about the average grade that sitting the plan.
Got it.
And I'll leave it there guys and jump back into queue. Thanks.
All right. Thanks Erez.
Our next question comes from Cosmos Chiu of C.I.D. seats. Please go ahead.
Hi, Thanks, Thanks, Rod Stewart, I think Greg and a very.
Very good financial today, and Thats certainly good to see that you put in a dividend tier.
I guess the market likes it as well.
Maybe first off on triple or.
As you talked about you know the cut back here and Meghan East pit is still on time and it looks like it's going to start contributing some higher grade material.
It is it can you remind me is that both of the oxides on sulfides that will benefit from it and what the magnitude in terms of the great improvement versus the main pit here.
Yes. There are there is a small contribution of oxide. The contact is sub vertical in manganese picked so when we get to the bottom of the pit we.
We still do get small.
Amounts of oxide.
And with regards to the cried I don't think Weve.
Weve disclosed sort of.
What the incremental increase will be but you remember that that cheer for mining right has always been higher than the than the processing right. As it was in the original technical report. So we do see the higher grade as it comes to the plan.
We are as I've discussed on previous calls always having to juggle grade and chemistry.
And it's one of the it's one of the advantages that will have when we get the flotation plant in Italy.
I have a bit of a disconnect between the chemistry, because we'll have a bit more control over sulfide grades in being able to manage.
Robin I reporting to the older cars.
For sure understood.
And then you know again on sharply her as you mentioned the Mdna you know the TFS.
Construction you had to you know slow it down a little bit however, you're still advancing ahead of you know operational requirement.
I meant you know without said you know in an ideal world would you want to catch up on that construction.
Later on maybe sometime in 2021 is that why you've talked about you know some of the capex catch up in 2021.
So weve with the.
Having stem at.
Sure plot and.
Another way to think of it is the lifestyle for them on.
So we take the competent suitable.
Mostly limestone material from the mine and use it for the placement with.
With compaction into the wall.
And.
And as a result, the role that the rise additives issues driven mostly by the morning right rather than the plant requirements. So we were a long way ahead of where we needed to be and when we didn't have enough drivers. What we did was founded area stock Paula or I'm, sorry, the the the tailings dam wall.
All material.
Partway through the tailings dam, so that we can free the fleet backup to go into the mine and were now there is a there is a small cost associated with that because we have to pick it back up and then take it the rest of the wise. So there is a cost to pick it up at some point in the future to move it out to the tailings dam, but where we're at.
A long way ahead of where we need to be in the tailings dam and we will remain there.
Mhm for sure [noise] again, maybe moving a head out to Marigold here you know as you talked about you've been transitioning from the lower levels of Mackey five to now the upper levels are my Q4, and then I think phase eight is also coming in.
Yes.
You talked about the grade being lower year over year due to the fact that you're transitioning into the upper levels I'm asking for.
Again, I have not I haven't been to Marigold for a while now but can you remind me in terms of I think I don't remember a lot of grade variability between the different phases, but.
But you know when are you getting in and out of it or could you give us some color in terms of you know the grade profile maybe.
You know intermediate term and also potentially longer term as well.
I can give you part of that animal appetite the risk or not sure.
We.
You are correct, we are transitioning out of Mackey, five and six and coming back half into for a night now.
Now and that we would be back down in Mackey Chief Finance five you.
You know I think about the second and third quarter, but Oh Wow.
I'll have to confirm those numbers for you.
Going forward.
But I guess as you go deeper.
As you transition deeper into the mind, you get higher grade sometimes as you are at the upper levels, you get lower grade and then you would come to that kind of kind of Mexico.
Yeah, we have been we have been below that.
Okay, Great and we're moving back towards the reserve grade as as you would expect.
Oh, okay.
Okay and.
Maybe you know one last question here on CB Santoy.
Stuart as you mention you know there's there's the ice road that's needed every year to replenish their inventories your supplies.
Any kind of concerns in terms of you know what COVID-19.
Impacts and what what not.
You know can you remind us I guess number one well what is the timing of building the ice road and number two do you foresee any kind of impact you know given the current pandemic.
So sorry niweek.
We done.
We expect to see any impact we build the right ourselves with their on time and the team is is ready to go to do that work as they normally would we we start building it to.
At the beginning of next year, we don't have to bring quite as much as we would normally bring across the our stride this year.
Because we were shut down for a period, we've got those materials and inventories applause.
On slide already.
So I won't be as big year as it usually is coming across the Australia, but we don't see any.
Any any impact from Covance.
In Middle East village.
To do that.
And again when are you going to start building. It so when is it going to get cold enough.
Hi, I think I started in January.
Okay, I'm certainly certainly.
They they need to wait for it to start to phrase and then they they may start to blur.
And then then I progressively take small.
Our trucks across to get it to Harlem, So moving the equipment across it hardens it.
And then usually by about February.
They're getting ready to to start to run it.
Okay, and maybe one last question maybe for Rod here, you know again, taking a step back looking at the Big picture here you know.
Well you know clearly one key catalysts is de Trippler.
Technical report coming out and it's great to see that no exploration results are coming out as well, but again you.
You know when could we expect.
Or are you expecting to put out some kind of longer term sort of guidance, maybe three your guidance in terms of production.
And costs and on top of that you know as you talked about Rod Youre looking at optimizing the portfolio and you know when can we start expecting more details in terms of Capex in terms of what's in the core portfolio what might not be you know certainly there's pit area. That's in it you know there was some.
And there are some talked previously about a new trucks at Marigold I'm, just wondering about timing and what kind of detailed could we expect thanks.
Thanks, Rob that was that.
Yeah that was a long question cause I appreciate it.
I think I think where it would sort of say <unk>.
As a new team that way.
Really to get the quarter three results and work behind us because it's been an important.
You are important for us to sort of demonstrate the.
The strength in the business and as well as we are now moving forward.
I think in the meantime, you know we've been basically work.
From bringing the organizations together and also ensuring we stay in things up and as part of that developing are the catalyst rich.
The actions that will come out he has a close 2020 off and then moving into 21, starting to look more about.
In the in the exploration and growth area, particularly.
How it all sort applies to give us a so I think I'm first things first.
Finishing you.
We've got catalysts already lined up as we've outlined in the quarterly results and then into next year starting to study.
Lauren all those up together and see how that plays out in terms of our yeah growth profiles in portfolio management.
Moving into 2021, so sorry, we got plenty only applied I'm, a pretty excited by the other growth potential and I think it sort of plays out when you look at our capital allocation strategy.
Gee I clearly we've got an are you into the business to ensure that we're continuing to reinvest and we're continuing to ensure that we have yeah. They are on the balance sheet to work to bring some of these these opportunities forward and.
And returning capital to our shareholders well I think we've covered a lot already as.
New team.
But we've got a fairly aggressive plan moving into 21 as well.
Thanks, a lot rod and that's a great answer and thanks again.
Our next question comes from Dalton Barreto of Canaccord. Please go ahead.
As it.
Thanks, operator, good evening everybody right.
I'd like to start by wishing you and your team all the very best for the New company.
Dodd said.
It is a very different companies in the last year, and so I'd really like to get a sense for how youre now given the world to the EPS.
So our lands you take you I'd love to get your thoughts on how you're thinking about growth versus shareholder returns and then also rests on the jurisdictional from a balance sheet perspective.
Then just finally your thoughts on silver given SSR as legacy operations as well as some stock buybacks.
Look I think don't win.
That's when that Paul and I were talking about the the merits of the.
The the merger and bringing both companies together, what we saw was a very close cultural alignment.
And in the lanes that we look through both businesses where.
Eerily similar and I think thats held true to where we.
Reacted ISO trouble.
From a lot of prospects, it's business as usual and and getting the team to get going and starting to think about what are we doing as a business and what do we need to deliver whats important or where do we prioritize our capital for the growth Yeah, a lot of the elements in it and.
Framework was already in place and thoughts were implies sarwan. So that's why I think in in a lot of regards we have hit the ground running and that's what you're saying obviously play out here with the the quarter three results in a number of the other catalysts coming up further in the next in this quarter in moving into next year. So.
So we're in really good shape and and that shouldn't be a surprise or they want because we did talk about.
We did talk about it.
In terms of if you are prioritizing some of that growth opportunities I would say that a few times that what we see in front of US right now is low capital intensity.
Across the portfolio because a lot of them are brownfields opportunities.
Maturities at a knee mine.
But of course, we have a number of.
Exciting greenfield opportunities within the portfolio quite an extensive multi.
Allotment that way progressing through and.
And looking how that might play out into our capital needs moving forward as we as we can.
Continue to evolve the SSR story.
Beyond this year and probably be on Nick next year as well I think that plays out I mean, our capital allocation strategy that I just mentioned.
Clearly there is an element that we want to retain money to grow and invest because that's the best Bang for the Buck for our shareholders.
In high yielding growth and we'll see how that plays out so.
We've got it all before US we got a great platform to start with we're off to a good start and.
Look forward to presenting more of these as we move into two next year.
Your last question on sales.
Now clearly.
Clearly with.
I mean, you're right it's specifically.
People have asked about the out the future tuna Qunar is a great contributor to the group level I mean, its cash generation. So.
It shouldn't be lost on folks that do not for us wallet wallets still does that and still generate side.
Okay.
On a.
Permian spices right, great free cash flow.
Yes, its welcome within the portfolio.
Against the other the other three operations, so thats our going in proposition.
And that hasn't changed at all.
And yes, we'll obviously continue to assess tuner.
And are in the longer term to see whether there are other opportunities around it as well that it may it may.
I actually evolve here into into something different so that'll be part of the thought processes moving into 21 as we continue to look at all the organic growth we have.
Our next question comes from Daniel Morgan.
Please go ahead.
Hi, Ret broad and Tim.
First question just on Sheplers.
Are you back on you know reasonable Manning levels can you just discuss do you know the kind of it impacts it chip learn and maybe just touch on the other assets you know way around.
On that issue as well thank you.
Yeah, So chip was.
Chip was back up to full meeting chip was actually got a rapid testing up and running it. So it now are they still are flooding people for a week when they come in are they doing both and.
Gene testing.
And ER and testing for the virus itself I wish I can turnaround in about an hour.
So.
We've got better control and things do seem to be improving in it.
In tuna.
They had very high rights as I said in my talk.
But you know they were up getting 25% positivity rights with Paypal It hasn't just in the last week or two really markedly dropped down.
I guess that means everybody's had it in there I mean, but there so.
So things seem to be getting a bit easier there.
At Marigold.
They've got quite a lot of controls in place to control people coming to saw it and ensuring it as.
As you May know, Nevada re seeing an increase in rights.
But the protocols that we've got in place a well established now and it's not impacting.
Joining us from a production perspective.
And then lastly at Seabee CV, we have had some issues with planning, particularly where we have quite a lot of indigenous folks coming in from sort of remote areas and.
And where there are instances where we.
And from infant.
From Saskatoon, as well, whether instances of family members or friends being positively after the live and coming back to site. So we are seeing some impact, but it's not as much as it was previously.
Okay. Thank you very much and.
The grades.
Stocked at Marigold Hussain, a big uplift or can you just talk about what you expect for the next couple of quarters I imagine that will go up towards you know half the grandma or more of a Q4 and into Q1 is that about right.
Night, we start head back up towards the Resis average.
I'm not sure they're going to get to a point fall.
In those in those periods.
I think it's a little bit below that but heading back towards the reserve numbers.
Okay, and then maybe just the dividend you know just came to explore the capital return.
<unk> framework that you've outlined a little bit more so great to see a dividend or earlier than I had thought.
<unk> 0.5, or so sorry, five cents per share, which is the basis is that just every quarter you know you're going to pay that and then just wondering how the supplementary works is that.
The quarter, you'll look at the free cash flow for the quarter behind you and go Okay. We're looking good.
Pat a supplementary or is it something that you might do on more a half year or annual basis look of the supplement true.
Thanks, Chad Thanks, Dan It's Greg I'll, just take that question. So as you say.
And we're certainly pleased to have the initial dividend announced then we'll start paying the regular quarterly dividend of five cents per share starting in Q1 EPS 2021.
And you know we will look at capital returns as one of the uses of our capital compared to you know as Rod STI talks about lots of opportunity.
You see on the portfolio.
So our.
Well, we will look at those supplemental dividends on a trailing 12 month term bill basis. So as we start to bed down got combined business and get those results put together. The you know the board will periodically review that so you know I think give us a little bit of time here to get things.
Though down in that the board will start to look at those supplemental returns and we'll be comparing.
Incremental dividends again share buybacks, just depending on market conditions and against other needs within the portfolio.
So on that and a follow up question just on the mechanics.
You know what do you need to do it mechanically to get a a buy back in and in Platts forgive me I'm not as I'm familiar with perhaps a Canadian Laurel jurisdictions regarding this you know you do need a H.M. approval is a board resolution.
How would you do that and and also a follow up question on that.
It is how do you make the assessment of a buyback versus a dividend.
Oh, yeah. Thanks, So you know within Canada. There is you know a normal course issuer bid structure that allows you some buyback opportunities you know tied to your liquidity. So a certain amount of volume so that is one strike.
Sure and if you you know if we wanted to do a more significant piece then yes, it's there's more regulatory and other approvals required and in terms of that in terms of the trade off you know, it's really going to be driven by really where we see market valuation conditions overall.
And again, if we see if we.
Second opportunity, where that makes more sense for our shareholders again. This will all be focused from a shareholder loans in terms of how we make that decision.
You see that as being a preference use of capital will move in that direction.
Okay. Thank you very much for your responses.
Thank you.
Once again, if you have a question. Please press Star then one.
Our next question comes from Mike Parkin of National Bank. Please go ahead.
Thanks, guys for taking my questions and congrats on the good quarter.
Just a follow up there on the M.C.I.B.
So are you assuming that's.
Vehicle you pursue like a share buyback would you be using you know like a peanut valuation that's something below spot like something.
Your trailing 12 month average or something so it kinda determine.
Whether or not you're actor within and savvy.
This is a cash payment.
Yeah. Thanks, Mike.
Obviously, we'll look at a number of [noise].
General market conditions. In addition to specific you know any specific factors that are playing out so.
You know I don't want to get a you know teach this year.
Thank God, because obviously, we see you know we're in a cyclical business here and we see a <unk> you know we can see a lot of volatility.
In market conditions over time, and so again, we would be looking at it over long term valuation parts certainly it wouldn't be our intent you know to you know to.
To use that structure, unless we really felt we were in a strong strong position to do so on a valuation perspective. So I think as we said we see the quarterly dividend as the primary recurring return of capital.
Then we will look at these on a supplemental basis. So it you know I would again focus you in terms of what we said.
There around the dividend being the primary capitals attorney fees.
Okay, Yeah that makes sense switching over to you know some of the stuff that's coming down the pipe in the next few weeks with respect to our Dutch he mentioned how it'll be P.A.
What are the next steps after that.
Are you going to go through like a full feasibility study or given.
Track record and experience, it's a regional kinda satellite for you.
Are you more comfortable having an earlier stage.
Economic analysis on it to move ahead with a construction decision.
[noise].
Yeah. Thanks for that so we've determined to provide to the P.I. because we're still exploring it sort of still growing up we wanted to give any indication of what our expectation was for the development and the development potential for.
It's a it's quite separate from chip for in that.
It's removed and we'll have to spend capital on it and then.
Bring that across and process. It at the Triple play with an expansion of the he played should sherpa, that's all incorporated into the into the P.I.
If we if we had gone down the pathway of doing reserve if we could have all of the.
Presented of smaller case that wasn't as indicative of what we expect it to be and then had to have done a subsequent reserve. Our expectation is we'll we'll issue. This it's a as I said earlier, it's a point in time.
And it represents a point in time.
A development opportunity, but the resources. These obviously already growing outside of that and our plan will be sometime in the next year or so to issue an update and at that point it will convert into a into a reserve most probably a reserve integrated chip huh.
But we'll we'll see but it will be a reserved in the next year or so.
Okay, so spending should be pretty much not much other than exploration color. So in the next 12 months.
No no we don't have a lot to spin. So we obviously, we've got the development costs as you know the metallurgical test.
Combos talks, but that's helped the order of $10 million.
Okay.
And just Swiss.
Phebe on an exploration standpoint, you do tend to kinda do more if your expansionary.
Step out drilling in the wintertime.
What is it that you're aiming to kind of focus on I remember you know a Batman zone look pretty exciting last year with results coming out of there plus some additional intercepts along but the six ships santoy shear.
Does it follow up work there are additional targets that you're aiming to test.
So there's quite a number of targets along but mineralized trend that goes down through Fisher, and then branches, how well site to the I guess to that no.
No waste as well.
And we have a series of targets. So in the exploration, you'll see that days, some drilling as well as field exploration and dies areas as well as in Ain Amenas field exploration and honestly it further away.
And in and around.
Around santoy itself.
And of course, we've been working on the cap hanging wall over the period as well I'm getting ready to convert that into a reserve.
Okay. We are looking we are looking this year to maybe invest a little bit more.
Exploration and around CP ticket sales, so it's a bit of a longer time horizon for decision making.
Okay and can you just remind us on what you need to do to take that ownership on Fisher from 60 to I believe you said earlier, 80%.
Yeah, Hi, Thanks, Mike its a its Greg here. So it's really just a one time 3 million dollar payment. It's due to our partner to do that to increase from 60 to 80 and well.
Well look at bad here as we work through the next number of months.
Okay.
Thanks, guys. All my other questions were answered so thanks very much.
Congrats again.
Thank you.
This concludes the question and answer session I'd like to turn the conference back over to Rod Intel for any closing remarks.
Well, thank you and thanks, operator, I'm wondering I appreciate everyone for participating today I'm on Oh first Uh huh.
First call as a combined entity and I wish you all a good day. Thank you very much.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Yes.