SSR Mining Inc. Q1 2023 Earnings Call
Okay.
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Hello, everyone and welcome to SSR Mining's first quarter 2023 conference call.
This call is being recorded at this time for opening remarks, and introductions I'd like to turn the call over to Alex Hahn check from SSR mining. Please go ahead.
Thank you operator, and Hello, everyone. Thank you for joining us I'm, sorry, Mining's first quarter 2023 conference call during which we'll provide an update on our business. There are a few of our financial performance.
Our first quarter 2023 consolidated financial statements have been presented in accordance with U S. GAAP.
Financial statements have been filed on Edgar and SEDAR.
Also available on our website.
To accompany our call there is an online webcast and you'll find 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.
Yeah.
Today's discussion will include forward looking statements.
Please read the disclosures in the relevant documents.
Joining us on the call today are rod Antal, President and CEO and Allison White CFO .
Now I will turn the call over to Rod for his opening remarks.
Great. Thanks, Alex and Hello to you all and thanks for joining us.
Well 2023, and focus on execution and operational delivery in the first quarter results are well aligned to our expectations.
We're on track for all our guidance targets and expect improving production and costs in the coming quarters to drive strong free cash flow for the remainder of the year.
The first quarter began with the release of our updated three year guidance.
We reiterate our expectations to deliver annual production of 700000 ounces through 2025, a level, we expect to maintain over the remainder of the decade without significant capital requirements.
We are progressing a number of key work programs to support that longer term production target, including preproduction activities of Checkmate <unk> extension with first production remains on track for 2023, as well as invest meaningful U haul trucks to support the wide stripping activities at Red dog.
In addition, we continued to check is yes, our exploration portfolio with it relates to some very impressive mnemon results from tuna.
Which have the potential to drive mineral reserve growth at.
The mine.
Providing further support to our longer term 700000 ounce production platform.
We have a number of key catalyst plan. This year. This includes first production from Checkmate <unk> extension.
The technical report updates at Marigold, and Shutterfly to showcase their up sorry.
An additional exploration results from the targets we have.
We continue our robust capital return program in the quarter.
Given our positive outlook for the remainder of the year as well as a robust balance sheet with almost $900 million entitled liquidity, We expect to remain active on the share buyback program.
We have a proud history as explorers mine builders and operators and our solid.
First quarter results have us on track to deliberate on our guidance targets as we have done over the non consecutive years before 2022.
With forthcoming positive catalysts across the business, we're reminding sort of for the year ahead.
I was going to move on to slide four where they just yet.
Okay.
Unfortunately, the Viper, we published our first annual ESG and sustainability report.
Marking another step and SSR mining's continued effort to operate responsibly and sustainably while maximizing the benefits to all stakeholders.
<unk> and has long been a core value and focus for the company as it firmly underpins our success.
We continue to prioritize the Hilton safety of our employees and business partners.
We've recently implemented a psychos and formal leadership in the field initiative to drive engagement and improved safety performance across the company.
Another key focus last year was a development that the global water strategy to help ensure we manage water is a vital resource for our operations and communities.
Now implementing more of a management plans for each one of the assets and are also continuing our efforts on integrated mine closure plans to ensure we leave a positive and lasting legacy for the communities in which we operate.
Additional key initiatives. This year will include the continued development of an action plan on our journey towards net zero.
Including evaluating options to incorporate renewable energy and decarbonization technologies in our operating platform.
As we have done previously we work hard to advance our ESG initiatives and look forward to sharing continued updates on that journey throughout the remainder of the year.
So let's move on to slide number five.
As I mentioned, we released three year guidance, which reiterated average vacations for stable production platform <unk> 700000 ounces.
With a robust exploration platform and number of growth initiatives already underway. We continue to expect that we can deliver the baseline production level through the remainder of the decade.
Later this year, we released updated technical reports with a maiden mineral reserves from chip, let's see two expansion project as well as an updated life of mine plan that incorporates nuances to marigolds new millennium target.
At Seabee and Puna recent exploration releases have highlighted the successes of Mnemon drilling activities that provides the opportunity to build reserves and extend mine lives at each one of the assets.
We will align to showcase these opportunities in 2024.
To ensure while the production platform outlined on this slide is largely centered on the mineral reserves only we see a number of opportunities to build on the existing reserves through the technical report update starting at the end of this year.
The purpose is the updated technical reports is to capture positive upside with respect to <unk> production and value from within the portfolio.
So let's move on to number six.
Number six.
On top of that reputation as operators, we have a proven history of project delivery and value accretive M&A.
<unk> remains unchanged, we continue to actively consider and evaluate opportunities to add value to our business through transactions that fit our strategy has low capital intensity growth in core jurisdictions and that complement our focus on free cash flow.
We successfully delivered on two of these deals in 2022 building.
Our ownership in mine assets are cheaper and.
CB two jurisdictions, where we have we feel we truly have an advantage.
So I'm going to turn over to slide number seven I'll hand, the presentation to Allison.
Thanks, Rod I'd like to first focus on our capital returns program and track record, which are well aligned to the three pillars of our capital allocation strategy.
We remain committed to our disciplined approach to the three pillars. This year continuing to reinvest in our business, ensuring balance sheet strength and executing on our final pillar to return capital to shareholders.
Through the end of April we've returned approximately $47 million to shareholders in the form of our dividend and through our active share buyback program.
Our strong start to return in 2023, following two consecutive years with shareholder returns averaging 5% annually.
Since the beginning of 2021 nearly $400 million of total capital has been returned to shareholders or approximately 14% of our current market cap.
As Rod had mentioned, we see a number of positive and value additive catalysts on the horizon.
We view our share buybacks at an accretive way to deliver further value to our shareholders.
Slide eight will provide a review of the first quarter. So let's take a look at our results.
There are a few key points that I'd like to highlight today.
The first quarter production of 147000 ounces was in line with budget.
All in sustaining costs of 1693.
Were also in line with expectations and reflect our guidance at the first half weighted sustaining capital profile, which included included higher planned spend associated with contract purchases at Marigold and purchases during the Seabee Winter Road season.
Overall, our full year production profile remains 55% to 60% weighted to the second half of the year and our free cash flow outlook remains even more heavily weighted to the second half of the year.
As planned sustaining capital.
Remains in Q2, and we remain on track for our consolidated 2023 guidance target.
Also within the quarter, we were pleased to announce.
Positive exploration results from Kunal and proud to release, our fifth annual ESG and sustainability report.
And now I'll discuss our quarterly financial performance in more detail on slide nine.
In the first quarter, we sold 155000 gold equivalent ounces generating $315 million in revenue and.
Attributable net income for the quarter was $30 million 14 per diluted share and adjusted attributable net income was $21 million or 10 cents per diluted share.
First quarter operating cash flow of $3 million and free cash flow of negative $56 million were impacted by the expected Capex spend mentioned on the previous slide and the changes in working capital.
Operating cash flow and free cash flow before changes in working capital were $91 million and $32 million.
As noted we continue to anticipate a second half weighted free cash flow profile supported by increased production and improving cost.
With respect to inflation, we've seen some relief from D C.
Some relief from diesel and power prices across the portfolio, but note that consumable pricing and labor cost pressures remain a headwind for us.
Overall, we remain on track for our full year consolidated capital and cost guidance.
Let's talk about our reported <unk> and diluted earnings per share that is calculated based on the company's definition of adjusted attributable net income per share and as shown on the right side of the presentation.
We start with our attributable net income of <unk> 14 per share and then make adjustments to exclude the after tax impact of specific items that are not reflective of the company's ongoing operations.
This quarter, primarily featured adjustments for tax impacts, including a onetime tax in Turkey to assist with earthquake recovery effort as well as a minor adjustment to the market value of our investment portfolio.
And turning to slide 10, we'll talk about Ssris financial position.
Okay.
Our balance sheet remains one of our key strengths and pillars of our capital allocation strategy with nearly $600 million in total cash and more than $310 million and net cash.
Total liquidity stood at nearly $900 million at the end of the first quarter.
We are committed to maintaining a robust balance sheet to weather volatility in the commodity price environment and to ensure all of our capital commitments that servicing requirement and based dividend payments are fully funded even in the event of a potential downturn in the gold price.
The quarterly base dividend up seven cents, a share is payable to our $1350 per ounce gold reserve price.
At the same time, we will continue to reinvest in internal growth, including our exceptionally high return check next hefei extension and CTO project as well as our plethora of exciting exploration programs across the portfolio that we have dedicated more than $80 million to this year.
Finally, our peer leading capital returns represent the third pillar of our overall strategy.
So far in 2023, our previously discussed share buyback and the annualized base dividend have us on track for a minimum full year capital returns yield in excess of 3% we will remain dynamic in our approach to share buybacks.
We have capacity to repurchase up to approximately $2 4 million shares on the current buyback program before its exploration later in June .
Our significant capital returns over the year to date are a meaningful tailwind for the company and I will leave the discussion on the positive note as I turn it back to Rob to walk through the asset right.
Alright, perfect. Thank you very much Alison.
Earlier this year, we welcomed booming <unk> EVP operations and sustainability after a successful career at Barrick amongst other places.
Since his arrival Bill has been laser focused on ensuring operational delivery from each of the assets already is identified a number of opportunities to help streamline and drive down costs and we're excited to see our portfolio continues to mature.
<unk> performance in ESG under his leadership.
Right now and as you would expect is in the field, but you will hear from him later in the year.
So I'm going to talk to slide number 12, starting off with <unk>.
Demand delivered quarter, one production the 55000 ounces at an all in sustaining cost of 400 $120 per ounce, reflecting our expectations for our production protocol weighted 55% for the second half of 2023.
Impressively the sulfide plant delivered its second consecutive quarter with throughput above 8000 tonnes per day showcasing the successful ramp up of the operations since last September .
In addition, we are finalizing the plans for full plant shutdown, which later will be light this quarter overall linked quarter three.
Otherwise programs that chip will continue to schedule, including first production from the more than $1 2 million ounces from <unk> extension project.
Also continuing to work on the CTO expansion opportunity.
Pre feasibility study, which will be published in the fourth quarter.
Clinical work to date has been built on the original technical report released in 2022.
See potential to further improve the existing study through the incorporation of successful drilling results and flow sheet optimizations and refinements.
Exploration work continues across the travel industry, including the original cargo tip, a target, where we expanded our ownership to 80% in quarter four last year.
We have a full suite of near and longer term growth opportunities across the district, and we will continue to aggressively advance during 2023.
Moving onto slide <unk>.
Marigold produced 52000 ounces in the first quarter in line with the planned production profile that is 60% to 70% weighted to the second half of the year.
Boy sustaining costs of $663 in the first quarter reflected the planned spend on the new haul truck purchases that has facilitated the stocks of waste stripping at the Red Dot target.
Sustaining capital will remain elevated in the second quarter on quarter as we complete the delivery of the remaining old trucks, and we forecast the all in sustaining cost to reduce in the second half of the year.
We expect to continue to recover the majority of the remaining ounces from last year's final rule material stacked in this.
Stacked in the second quarter.
During the remainder of the year, we will stack more typical durable at Marigold and have already seen leach cycles returned to normal.
Alright go remains on track for a strong 2023 with full year production of 260 to 290000 ounces.
We are continuing to progress. The work ahead of an updated technical report for Marigold, where were working to capture upside.
This includes incorporating more than two years of drilling in particular on the new millennium target.
Work is underway to identify longer term production pathways.
Trenton Canyon, and Buffalo Valley at the southern end of the Marigold property.
Moving onto slide 14 and CB.
First quarter production reflected a now resolved issue with underground equipment availability that negatively impacted the month's sequencing schedule.
As a result.
While we had expected the first quarter to represent the lowest period of production to the operation.
<unk> process were below expectations and while we are working hard.
Hit the full year guidance for <unk> this will be a challenge.
In addition, <unk> Winter road season means costs are heavily weighted to the first half of the year.
Well it continues to advance knee.
<unk> mine exploration at Seabee, as we prioritize mineral resource conversion activities to ensure mineral reserve growth and mine life extensions in the future.
We also continue to evaluate early stage exploration targets at Dave.
But a lot of the existing St join mineralization as well as regional targets like Porky main bulky worse that could contribute meaningfully to <unk> longer term production platform.
On to slide 15 of tuna.
<unk> once again delivered a strong quarter with 2 million ounces of production at an all in sustaining costs of $6 million 40 announce sooner.
<unk> remains well on track for its full year guidance with production, 50% to 55% weighted to the second half and costly also improving in half two.
In the core in the quarter, we announced positive exploration results from tuna predominantly focused on the mine resource and reserve expansion efforts as we aim to extend the life of mine plans.
We also demonstrated successful step out drill results at Dakota, there is target on the <unk> property, which could also represent a longer term growth opportunity for the mine.
Moving onto 6 billion in our exploration.
Sitting on the exploration success with tuna and the other assets would continue globally across the portfolio of growth opportunities.
<unk> exploration continues to advance at all for producing assets and were excited to showcase. These results in the forthcoming updated technical reports starting with chiller Marigold in the fourth quarter of this year.
Work continues at our Greenfield targeting called jurisdictions, and we expect to have enough tight from a copper hill targeting the covenant coming months.
Waiting to invest significantly in exploration across the platform recognize the significant value we can deliver to shareholders through the organic growth for you guys.
So just some concluding remarks before I open it up to Q&A.
We started the year well and look forward to regain some of the lost momentum as we deliver against our operational targets throughout the year.
We remain firmly committed to capital returns as evidenced by the continued activity on our share buyback program and expect to deliver strong free cash flow into the second half of this year.
We're excited for the many catalysts that we've explained that will be released during 2023, including the first production from the Checkmate <unk> extension project as well as highlighting the upside potential associated with that chip and Marigold mines in the new technical reports planned for later this year.
This is our money is in a great position and we look forward to continuing to demonstrate that to the market throughout the remainder of the year so with that.
Operator, let's open it up to questions. Please thank.
Thank you Mr. Chantal to join the question queue. You May Press Star then one on your telephone keypad Youll hear tone acknowledging your request.
If you're using a speaker phone please pick up your handset before pressing any keys.
Withdraw your question Press Star then two.
Our first question is from Michael <unk> with <unk> with RBC capital markets. Please go ahead.
Thanks, very much Ron and team for taking my questions.
Maybe a couple of questions on Marigold and Puna, if I could first on Marigold.
Know that you have the update coming but can you talk a bit more about how youre thinking about the longer term there what what considerations you're taking into account for sequencing in new millennium.
Trend in Buffalo Valley and at this point.
I suppose could you say, whether or not it's possible that the lower guidance in 2025 could.
Could be back filled with with some of the new pits.
Hi, Michael.
Marigold.
The key focus for us is in <unk>.
Actually all of the assets right now.
Is getting some of the conversion of the exploration we've been doing over the last few years.
The real particular emphasis.
<unk> as it has been.
And particularly at Marigold.
Near term opportunities that will add life to the current production profiles and as you rightly point out with an emphasis on looking for opportunities to fill some of the values that we have in the production profiles and improve them. So now with that in mind. It is.
Really been an effort immediately around the oxide opportunities.
And in particular around the new millennium targets, so that will be a key feature of the <unk>.
The technical report, but while we're doing that we're all sort of caught.
I'll add to the future and part of the work that we are doing is.
Looking at developing those sort of path wise.
If you'd like to to the longer dated opportunities to answer the southern end of the property.
Trenton Canyon, and Buffalo Valley, So they're much more in early stage in terms of their life cycle, but.
In terms of our thought process as to how we're thinking about them.
We are doing some initial concepts of how they might.
Play into into the longer dated future at Marigold, but initially it's really just a focus on.
Improving the production protocol and extending the production profile of America.
So is it.
Is it fair to characterize the exercise as.
Figuring out how they would be sequenced.
You'd move or around or is it is it more at this point figuring out what the the mineral endowment is at each of the targets or both.
It's a little bit of all that and remember we're talking about two different things there there are and if you're talking particularly to the.
Both Trenton Canyon Buffalo Valley, there is but the oxide opportunity that potentially the sulfide opportunity. So.
And some of those considerations.
Is it large enough to support its on infrastructure should we put our heap leach pad down in.
In that location rather than holding it all the way up into.
Into the Marigold mine.
Good morning, and processing area et cetera, et cetera. So there is some of the early considerations that we're doing and tradeoffs, but yes.
Drilling drilling is also catching up to help us define the size of the prize.
Okay.
Great that's helpful and maybe just flipping to Pune.
Could you update us maybe on how you think about Pune in the portfolio, you've obviously had the solid exploration results you've been reinvesting obviously silver has moved higher to do you think you get full value for that silver should we still think of it as a core operation in core jurisdiction in Argentina, and do you expect this level of.
Reinvestment in exploration too.
Continue for the foreseeable future.
Yes, I think if you take a step back and look at it.
Probably from.
In exploration perspective, it's actually been Underinvested for a number of years and.
Last year was really first if it of.
Putting some more effort and dollars into the exploration programs.
And.
I guess not a surprise to us.
The drill results that we're releasing in quarter one.
Outstanding and.
To show.
Clearly a potential there for mine life mine life extension.
For the for the assets so thats a good place to start so yeah, what we're generating those results.
Standing.
How they play into.
The longer term picture for <unk>.
For extending the mine life that will get more dollars to invest into it.
But.
At this stage tuner remains an asset a core asset to us.
And as it continues to evolve.
That will be important to us to to to really understand its full potential.
As an asset in the portfolio so yes it.
It's pretty exciting the some of the results we're getting down there.
Okay great.
That's helpful. Thanks, and I'll pass on the line. Thank you.
Once again, if you have a question. Please press Star then one.
Your next question is from Cosmos <unk> with CIBC. Please go ahead.
Hi, Thanks, a lot and team for the conference call sorry, if I have answered some of my questions here, but I missed the first 10 minutes because it took them 10 minutes together.
But maybe first off on CBD Rod you know not.
Not the best quarter in Q1 as you mentioned.
Could you maybe elaborate on what.
<unk> downtime issues whatever.
And how they were resolved.
It looks sorry.
Sorry, I missed the first 10 minutes.
And happy to answer the questions.
Happy to answer your question as I look at the CPI issue was just equipment availability, we had we.
We had some unscheduled maintenance, which meant that.
The.
Development rights and access to.
The mine schedule that we had actually planned for Meg we weren't able to do that so.
So instead of accessing some of the better grades were in areas, where we hadn't planned to be so it's as simple as that.
We have now overcome those and and the.
The fleet is up.
Back and running.
But as you know with a quarter behind us.
We're going to do everything we can to catch it back up but.
It might be it might be a bit of a stretch to sort of <unk>.
Get back to two to that bottom end of guidance, but again, if I look at it from an overall perspective and materiality.
Compared to the other assets, obviously, its a smaller contributor so.
It's not a it's not a concern for us on a consolidated basis at this stage.
Of course.
And I think in the MD&A you mentioned that you know they're trending back up to reserve grade I think.
Reserve grade 635 Gram per tonne how does it work is it like linear or are you going to get back to it right away and.
How should we look at grade.
I look at it as soon as we as soon as we get back into the more normal sequence you would expect it to be on that average cost.
So to answer your question yes.
Would expect it to get back to that that the average for the year.
And then last year was a very good year. The one positive grade reconciliation to the point, where I think at one point in time, you are trying to look to see do some exploration around the fringes to see if we can find some of that higher grade I didn't see it mentioned in the MD&A, but could that be an X factor in terms of CEB is there any kind of.
10 show here in terms of the higher grades that you saw last year this year.
Yes.
Look we certainly still in terms of the exploration efforts.
We do have a program looking at.
Continuation of the mineralization at depth that is true.
And that's part of the.
The actual work this year.
In term in terms of planning for the <unk> that you expect us to do that.
Yeah, I would look at that that happens to two to play out.
Lucky us, but we don't play in that way.
Yeah.
The final bill on.
Electrical.
Okay.
Walmart closer with the first alright.
Alright, Thank you awesome.
Switching gears to chair pillar.
You're hearing in a number of catalysts coming up checkmate tip extension and then also see too.
Have you ever disclosed brought I forget.
How much of your accounting for in terms of Checkmate <unk> extension coming in in terms of production ounces.
Get to your guidance for the year truckload did you talk about that or if you didn't.
Because I don't think we actually put it into into.
By location, but.
Overall the <unk>.
Oxide production for this year is 30 to 35000 ounces.
Hmm mm.
And part of that.
Probably a third of that is the Czech market extension.
Okay, Great and then and then I'll cede to the <unk> project sounds like there's a lot of potential here.
Could you remind us the <unk> project is that within your.
But you talked about a few months ago. The sub back in 2000 ounce sort of platform is that is that included or could we see more upside from what you've included.
If you remember when we put out the technical report there was a.
Also a discussion around the member.
Remember the take one step back seat to itself in the first round was <unk>.
So it was a very initial sort of caught all of what we saw in situ.
And those ounces were included.
As we've said a number of times that the work that we're doing since then to now take us into.
The next round of update which is later this year is to put it into a PFS so a higher level.
DHL and study and there is to really focus areas for US one is the.
Yes, the continuation of including some of the exploration that we've been doing.
But to the really the flush.
Optimization efforts to lockdown.
Other opportunities that having that taught the flow sheet available to us.
So not beyond say two so.
It's not probably too much to go on to in this call because it's still a work in progress but.
Our expectation is what you saw in the study.
Study in 2022 was just the start of.
That's sort of the evolution of lets say two will become.
Uh huh.
And more and more it gets decided and otherwise we expect more upside through sort of the work we're doing at the moment.
Of course, yeah, great. Thanks, Rod and team and those are all the questions I had thanks again at any cost.
This concludes the question and answer session I will turn the conference back over to Mr. John <unk>.
Alright, good thanks, very much and again, thanks very much for joining us on.
On the call and look forward to a very strong 2023 and talk to you all soon.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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