SSR Mining Inc. Q1 2023 Earnings Call
But you will provide an update on our business and a review of our financial performance.
First quarter 2023 consolidated financial statements have been presented in accordance with U S. GAAP.
These financial statements have been filed on Edgar and SEDAR.
And they're 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.
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 rod Antal, President and CEO and Allison White CFO .
Now I will turn the call over to Rob Burton opening remarks.
Great. Thanks, Alex and Hello to you all and thanks for joining us.
Well, you mean 2023 focus on execution and operational delivery in the first quarter results of Willow lawn 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 I began with the release of our updated three year guidance, we reiterated our expectation to deliver annual production of 700000 ounces through 2025.
High level, we expect to my time 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 white stripping activities at Red dog.
In addition, we continue to check is there our exploration portfolio with it relates to some very impressive mnemon results from tuna, which.
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 playing this year. This includes first production from Checkmate <unk> extension.
The technical report updates at Marigold at Shutterfly to Shanghai, So they are up sorry.
Additional exploration results from the targets we have.
We continue their robust capital return program in the quarter and 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 a 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 full coming 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 ship.
Okay.
Unfortunately, the Viper, we published our first annual ESG sustainability report.
Marking another step and SSR mining's continued effort to operate responsibly and sustainably while maximizing the benefits to all our stakeholders.
He used to use and has long been a core value and focus for the company as a family underpins our success.
We continue to prioritize the Hilton safety of our employees and business partners and have recently implemented a factors inform our leadership in the field initiative to drive engagement and improved safety performance across the company.
Another key focus last year was the development of the <unk>.
Global water strategy to help ensure we manage water is a vital resource for our operations and communities.
We are 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 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 we reiterated our expectations for stable production platform.
700000 ounces.
With the right boss 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.
Let's see being Pune recent exploration releases have highlighted successes a name on drilling activities that provides the opportunity to build reserves and extend mine lives at each one of the assets.
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.
Purpose, if the updated technical reports is to capture positive upside with respect to <unk> production and value from within the portfolio.
Let's move on to number six.
Slide number six on top of that reputation as operators, we have a proven history of project delivery and value accretive M&A.
Price to women I 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 <unk>.
Our ownership in mine assets of Chippewa.
CB two jurisdictions, where we have we feel we truly have an advantage.
I'm going to send out the 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, followed 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 tuna 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 a 155000 gold equivalent ounces generating $315 million in revenue.
Attributable net income for the quarter was $30 million or 14 cents 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.
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 10 cents 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 14 cents 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 impact, including a one time tax in Turkey to assist with earthquake recovery efforts as well as a minor adjustment to the market value of our investment portfolio.
And turning to slide 10, we'll talk about ssrs 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 debt servicing requirements and base dividend payments are fully funded even in the event of a potential downturn in the gold price.
The quarterly base dividend of 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 Hebei extension and CTO projects 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 buybacks 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 and have capacity to repurchase up to approximately $2 4 million.
Shares on the current buyback program, thus far it's exploration later in June .
Our significant capital returns over the year to date are a meaningful tailwind for the company and I'll leave the discussion on the positive note as they turn it back to Rob to walk through the asset right.
Alright, perfect. Thank you very much Alison.
Earlier this year, we welcomed booming Nathan is that the EVP operations and sustainability after a successful career at Barrick amongst other places.
Then just the ragu 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.
Both performance and 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 deliberate quarter, one production the 55000 ounces at an all in sustaining cost a fortune $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 operation since loss of timber.
In addition, we are finalizing the plans for a full plant shutdown, which will either be late this quarter overall linked quarter three.
How the work programs the Chippewa continue to schedule, including first production from the more than $1 2 million ounces from the <unk> extension project.
Also continuing to work on the CTO expansion opportunity.
The 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.
We 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 Cacau tip, a target, where we expanded our ownership to 80% in quarter four last year.
We have a full suite of knee and longer term growth opportunities across the district, and we will continue to aggressively advance during 2023.
Moving on to 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 six $863 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 to 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.
The remainder of the year, we will stack more typical durable at Marigold and have already see sitting leach cycles returned to normal.
Barry 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 we are working to capture upside.
This includes incorporating more than two years of drilling in particular on the new millennial target.
Work is underway to identify longer term production pilots, who is that both 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 mine sequencing schedule.
As a result.
We 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.
Before we got into the C V. This will be a challenge.
In addition, C bodies Winter road season means costs are heavily weighted to the first half of the year.
Well it continues to advance a knee 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 depth.
But a lot of the existing St join mineralization as well as regional targets like Porky main bulky worse that could contribute meaningfully to see base longer term production platform.
On to slide 15 and tuna.
Apparently once again delivered a strong quarter with 2 million ounces of production at an all in sustaining costs of $6 million 40, an ounce.
<unk> remains well on track for its full year guidance with production of 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 with Qunar predominantly focused on knee 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 Derose target on the vacated as property, which could also represent a longer term growth opportunity for the mine.
Moving onto 16 in our exploration.
Bidding on the exploration success with tuna and the other assets would continue globally across the portfolio of growth opportunities.
The mine exploration continues to advance at all for producing assets. They were excited to showcase these results in the forthcoming updated technical reports starting with Trippler 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 target in the coming months.
We plan to invest significantly in exploration across the platform recognizing the significant value we can deliver to shareholders through the organic growth we have.
So just some concluding remarks before I open it up to Q&A you know as you heard 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.
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 Monty he 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 Bob.
Alright, let's open it up to questions. Please.
Thank you Mr. Chantal to join the question queue. You May Press Star then one on your telephone keypad, you'll 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 Press Star then two.
Our first question is from Michael <unk> with <unk> with RBC capital markets. Please go ahead.
Thanks, very much rod and team for taking my questions.
Maybe a couple of questions on Marigold and Puna, if I could first off on Marigold I know that you have the update coming but can you talk a bit more about how you're 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.
Yeah, Hi, Michael.
Marigold.
The key focus for us is.
And similar to 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 the real particular emphasis of course I was as it has been hum and particularly at Marigold.
Near term opportunities that.
We'll let lives 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 in it and and improve them. So now with that in mind.
It's 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 the Tinder can report, but what we're doing that we're all sort of caught.
O I to the future and part of the work that we are doing is.
Looking at and developing those sort of path wise.
If you'd like to add to the longer dated opportunities down to the southern end of the property at both Trenton Canyon and Buffalo Valley. So they're much more in early stage in terms of their lifecycle, but.
But in terms of our thought process is and 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 to focus on.
Improving the production profile and extending the production profile of America.
So it is it.
Is it fair to characterize the exercise as figuring out how they'd be sequenced, how you'd 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 that both Trenton Canyon and Buffalo Valley, there's but the oxide opportunities at a potentially the sulfide opportunity. So.
And some of those considerations are easy.
Is it large enough to support its on infrastructure I mean, how should we put out heap leach pad down.
In that location, rather than whom we get all the way up into our into the Marigold.
Assessing area et cetera, et cetera. So there's some of the early considerations that we're doing in trade offs, but yes.
Drilling drilling is also catching up the to help us define the size of the prize.
Okay. That's 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'll 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 and exploration to continue.
Continue for the foreseeable future.
Yeah, I think he would be that you'd be taking a step back and look at tutor.
From an exploration perspective, but it's actually been underinvested for a number of years and.
Last year was the I really first if it is.
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 were outstanding and do show.
Clearly a potential there for mine life mine life extension.
For the for the assets. So that's a good place to start so yeah, what we're generating does results in them understanding how.
How they play into the.
The longer term picture for Qunar.
For extending the mine life, they will get more dollars to invest into it but at.
At this stage, yeah tuna 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 a as an asset in the portfolio. So yeah I would say.
It's pretty exciting the some of the results we're getting them at.
Okay, Great no. That's that's helpful. Thanks, and I'll 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 to get them.
But so maybe first off on C V. Rod you know not I'm not the best quarter in Q1 as you mentioned could you maybe elaborate on what.
<unk> downtime issues whatever.
And you know how they were resolved.
Hi cause you at look sorry.
Sorry, you missed the first 10 minutes, but.
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 had some unscheduled maintenance which meant that the.
The development rights and access to the mine schedule that we are actually playing for make we weren't able to do that so hum. So instead of accessing some of the better grades were in areas, where we hadn't planes, but he said it was as simple as that.
We have now overcome those and.
And and the fleet is 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 it might be it might be a bit of a stretch to sort of get back to two to that bottom end of guidance, but again, if I look at it from an overall perspective and materiality hum compared to the other assets obviously, it's a.
Smaller contributors.
Yeah, it's not a it's not a concern for us on a consolidated basis at this stage.
Of course, and yeah, I think in the MD&A you mentioned that you know they're trending back up to reserve grade I think.
<unk> 6.35 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.
We would expect it to get back to that that the average for the year.
And that brought 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 you know look to see and do some exploration around the fringes to see if you could 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 high agree that you saw last year this year.
Hum.
Suddenly still in terms of the exploration if it's we do have a program looking at the at the continuation of the mineralization at depth that is true.
That's part of the.
Actual work this year in terms of in terms of planning for the electrical impulse sales calls that's a dangerous practice to do but I'm looking at that that happens to two to play out.
Lucky us, but we don't play in that way.
But whereas the five belton electrical.
If we went too far and why it goes you would be the first to not alright.
Alright, Thank you awesome.
Maybe switching gears to chair pillar.
Great to hear you're in a number of catalysts coming up Checkmate <unk> extension and then also see too have you ever disclosed broad I forget.
How much of a you are accounting for in terms of checkmate tepid extension coming yet in terms of production ounces to get to your guidance for the year for truckload did you ever talk about that or if you didn't tell me.
Cause I I I I don't think we actually put it into into.
By location, but.
Overall the oxide.
Outside production Triple this year is 30 to 35000 ounces.
And and paying part of that.
Hum.
Probably a third of that is the checkmate <unk> extension.
Yeah, Great and then and I don't see too that CTO project sounds like it's you know there's a lot of potential here.
Could you remind us you know the CTO project is that within your.
But you talked about a few months ago to sub out in 2000 ounce sort of platform is that is that included or are we can 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.
Remember the good taking one step back seat to itself and the the first round was mobilized locker PIH is oh.
So it was a very initial sort of caught all of what we what we what we saw at sea to.
That that 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 lighter this year is to put it into a PFS so a higher level.
DHL and study and there's two really focus areas for US one is the yeah, the continuation of including some of the exploration that we've been doing but to the really the flush a optimization efforts to lock down.
Other opportunities that having that taught the flow sheet available to us might open up beyond say two so it is not probably too much to go on to when these cool because it's still a work in progress but Eric.
Our expectation is what you saw in the study.
Study in 2022 was just the start of the the that's sort of the evolution of what's they too will become.
Hum.
And more and more I guess 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 are those all of the questions. Thanks again.
And of course, yeah.
This concludes the question and answer session I will turn the conference back over to Mr. John tell.
Alright, good thanks, very much and again, thanks very much for joining us.
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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