Q2 2023 SSR Mining Inc Earnings Call
Hello, everyone and welcome to S. S. R mining second quarter, 20th 23 conference call.
Call is being recorded.
At this time for opening remarks, and introductions I'd like to check.
Alex I'm Chuck.
That's our money.
Thank you operator, Hello, everyone. Thank you for joining us to start mining second quarter of 2023 conference call.
Provide an update on our business.
Financial performance.
Our second quarter of 2023 consolidated financial statements have been presented in accordance with the U S. Yeah.
Financial statements I've been filed on Edgard SEDAR.
And are also available on our website.
[noise] alcohol there isn't online webcast, you'll find me information to access the webcast in a news release relating to this call.
Please note that all fingers discussed during the call or in U S dollars unless otherwise indicated.
Today's discussion will include forward looking statements. So please read the disclosure and they're relevant documents.
Joining us on the call today are wrought Angelo executive chairman.
Alison White, Chief Financial Officer, and Bill Mcnevin Executive Vice President of operations and sustainability.
Now I will turn the call over to Rod very opening remarks.
Thanks, Alex Hello to you all and thanks for joining us.
Before I get started I wanted to introduce bill make Nathan who is joining us quarterly.
Quarterly or any school.
It's a pleasure to have him finally join us he's been in the field for the last six months and welcome to the call Bill.
That's where he closed out the first half of 2023 is pleasing to report that a consolidated operational results to die have been generally well onto our expectations.
Production from chapter Marigold entered have been solid partially offsetting the slowest start to the year it's ebay.
Looking forward it as we got it at the beginning of the year, we expect the second half to burn the majority of Iran's production and free cash flow generation.
Got portfolio is expected to deliver strong production.
400000 G E OS split relatively evenly between the third and fourth quarters every juice cause.
Alrighty and posed to the free cash flow.
Even though our outlook for a strong second half of the year and they are <unk>.
<unk> share price, we repay just about $45 million.
As in the first half of the year.
Buying without by stupid and we are on track to exceed $100 million in capital returns in 2023 or 3.4% you.
This is strong message that shoe considering they're free cash flow outlook for the second half of the year.
It was a busy quarter advancing are organic production growth and enhancing our strategic acquisition.
Chip was checked my tip a extension we began prestripping that will allow access to the first oxide. All this <expletive> and is and is a line to our original time table.
Same this progress is obviously very excited.
Both sides during the quarter, we announced the Harley accretive acquisition, if the World Class Hot Madam project, Kentucky.
Which provides us operators shape.
Ended up to 40% interest in the project.
We've been busy completing the hand, either from your partner Lydia Barnes, who has been doing a tremendous job advancing the project and establishing sustainable relationships with all the key stakeholders.
Putting the local communities.
Being focused on recruiting the project team to compliment the team already on the ground and progressing the initial sod works which are underway.
Finally, we anticipate the release, but I've got a technical report and subsequent construction decision for the project.
2024.
We also have a number of key value driving catalysts on the horizon.
This includes the first production from the check my Tech by extension and the technical report updated showcase the future Merry go check and again called Madam.
Technical reports so the next step anyhow continued derisking.
Two 700000 dance.
[noise] auction platform that forms the foundation of his his Ah.
We have a proud history as explorers builders and operators as well as a long track record of prudent value additives, Hey man I.
Yeah, a business and it is in a strong position supported by a solo imbalance shape, including the more than $700 million entitled liquidity.
I'm Gonna move on to slide number four and I'll talk about it is G.
Yeah. She is.
And there's long been a cool value and focus for the company is a fairly underpin jazz success.
Senior to prioritize the health and safety of their employees and business partners in on the 14th of April . This year, we probably should have peace annual Asj sustainability report backing another step finish this manes continued efforts.
Upper I responsibly and sustainably, while maximizing the benefits to our stakeholders.
In 2023, and as an important improvement opportunity, we reinvigorated I focused informal latest sheep in the field initiative to drive engagement and improve safety performance across the operations, which is being met with enthusiasm for Matt James.
Additional ta initiatives. This year include continued development of an action plan on out journey towards decarbonization, including evaluating options to incorporate renewable energy and technologies into our operating platforms.
Progressing water management plans for each of our assets and finally progressing our efforts on integrated Mon close your plans to ensure that we leave a positive and lasting legacy for our local communities.
As we've done previously.
Two event area is chi initiatives.
Look forward to sharing continued updates on that journey throughout the year.
So moving onto slide number five.
As I mentioned, we have established a pathway to maintaining a stable production platform.
700000 ounces.
A reminder of the decade.
That platform was further supported by the acquisition at the Heart Madame project, adding one of the highest return development projects in the World to me I need to grasp profile.
We continued to advanced drilling and cynical work.
The updated technical reports.
<unk> sure if an odd Madam. Additionally, expiration continues as C b into that with the goal of building reserves and extending mine lives that each one of those as it is.
We intend to consider these efforts into updated and lots of mine plays providing a full refresh is H S. It's longterm production profile as well as highlighting opportunities for future growth.
We're in a good position to build on the existing production price Hall demonstrated on this flawed.
By delivering large capital intensity high return organic growth.
To continue demonstrating your opposition is a strong and consistent operator with a commitment to free cash flow generation.
Moving on to slide six just to talk a little bit about called Madam.
As I mentioned in the second quarter, we announced.
And closed the transaction that provides a S. S. A morning operettas ship.
And up to a 40% interest in the World class called Madam project and abilities and take care.
Madam perfectly complimented portfolio with best in class called equivalent grades.
Grams per ton and in everybody's life of mine coproduct or sustaining cause less.
Less than $600 an ounce.
We have a proven track record of success in the country and are advancing sock preparation activities at the project as we speak.
Technical teams are harder work optimizing the design.
<unk> execution and production plans developed by a partner while also evaluating additional lopsided opportunities.
Does she we're spending a total of $21 million and are working to arrange financing for the construction decision.
Next year, we expect to issue an apt at a technical report for the project, which will inform the construction decisions for a board.
This first quote I'll cause matinees expected to generate Phoenix is about $160 million in free cashflow annually or more than $65 million in attributable free cashflow using 1600 dollar per round Spice K skull price.
The instruction transaction limited upfront capital outlay.
And we expect he will help preserve.
Better than a 15 per se all in acquisition eternal right of return for shareholders by the time the project using production.
[noise] overrule the transaction was a material positive for a business.
Listing partnership with Lydia minds, and their new partners Horizon, and we look forward to updating you on the progress as we continue along that journey.
Since moving on to slide seven.
We are confident in their ability to deliver shareholder value with augmentin transaction, because as you can see it as something we've done before.
The same project development team and strategies that successfully did live with the chips are sulfide.
Project on time and under budget is currently being deployed.
Redeployed to the hard Madden project further do re seeing the project Bill.
In addition to that <unk>.
Experience is mine builders, we have a clear track record of adding value through them and I and continue to see further up saw it across the portfolio that delivers additional values to shareholders.
Our approach to women I remains unchanged we.
We will continue to actively consider and evaluate opportunities to add value to our business through transactions that fade out strategy disciplined garage in coal jurisdictions and that compliment Cal focus on free cash flow. So.
So with that I'm Gonna turn divers slide number right in hand, the presentation I would've Allison.
Good afternoon, everyone.
I liked the first okay on our <unk> program, which remained active in the second quarter.
Three pillars at our capital allocation strategy complemented by reinvesting in our backyard and ensuring balance sheet strength.
And again, we have returned approximately $74 million to shareholders and <unk> and share buyback program. We are on track to return for $100 million to shareholders for the third consecutive year.
In total we have returned more than $400 million over the last three years, which is something we are very proud of.
The company is still the same.
Prime minimum follow your capital returns yelled at at least 3.4% based on the activity that we've already had this year.
As Rob mentions we see a number of positive and value added his cadillac.
Alright, then as.
As well as positive operational tailwind.
That's we view the buyback as an accretive way to return capital to shareholders.
Yeah, and your last month at the corner.
He also renewed our share buyback program, enabling.
To repurchase up to an additional 10.2 million shares over the next 12 months.
Five nine will provide a review of the second quarter, So, let's turn to that and take a look at our results.
Second quarter production of 137000 calls cause.
One ounces and first half production at 304000 gold equivalent ounces.
With our expectations.
Second half way to production profile.
Sales in the second quarter, where 148000 called equivalent ounces.
9000 ounces produced but not holding a quarter was driven by a closure at the bank and that'll market during the last week of kin for Turkish holiday.
And a late arrival.
<unk>, where we should concentrate tuna.
That timing differences and the answers were spelled in the third quarter.
Oh and sustaining cost at $1633 an hour.
Slightly high but in line with expectations and reflect.
The first half waited sustaining capital profile.
Replaced for new how track Thank you service that miracle.
Our first half.
The first half of sustaining capital C. D is also always high.
Purchases named for transport on the ice route that supports operation at that location for the entire year.
But all in sustaining the ninth denominator with also impacted by the 9000 ounces in unsold inventory at <unk>, which decrease the answer for the calculation and what have increased our overall.
<unk>.
Alrighty fresh air with 35 cents per diluted share.
<unk> net income and I just need to check on that for about approximately $75 million.
Tax benefit.
At about 46 million during the quarter after considering the noncontrolling and chest.
With the acquisition of Cartel tap a late last year and <unk> are deferred tax liability increased by more than $200 million.
Increase in the total date value of liabilities is then subject to the currency devaluation that has occurred thus far in 2000 twenty-three driving the net benefit after consideration of now controlling interest reductions.
And a quarter, we delivered positive free cash flow of 22 million or 46 million for working capital address ma'am.
For the remainder of 2023, our production remains relatively evenly split between the third and fourth quarters with a decline in the pace understand I'm sustaining capital.
<unk> free cash flow.
Yeah.
With respect to inflation, we've seen an improvement and data and power prices across the portfolio.
But note that consumable pricing and labor cost pressures you remain a headwind.
Overall however.
Remain on track for our full year consolidated capital and <unk> <unk>.
On July 15th.
<unk> announced that five per cent increase in the corporate tax rate from 20% to 25% that is retroactive to January 1st 2023.
While we are still working.
The value at the financial impact of the change.
<unk> will increase guaranteed three when we recorded the five per cent increase.
Cash taxes, we do not anticipate a material change in the short term.
The existing incentive tax credits in the country that are currently.
Any additional benefits such as the one we had in the second quarter, resulting from devaluation will continue to add that additional expense expected as a result of the right change to 25 per cent.
Now turning to 510, we can talk about at the time my name's financial position.
Our balance sheet remains another of our key strengths and a pillar of our capital allocation strategy.
Our cash position currently stands at more than $410 million.
Reflecting our continued delivery of pure leading capital returns and $129 an upfront consideration paid as a part of the Heartland transaction, which was.
Paid during the quarter.
Total liquidity is currently more than 700 million and we expect positive free cash flow into the end of 2023 that will further reinforce our financial position.
We are committed to maintaining a robust balance sheet to whether volatility in the commodity price environment and sharing all of our capital commitment that's everything requirements.
And payments are fully funded even in the event of a potential downturn in the gold price.
As such a quarterly based dividend of seven cents a share.
It's painful to our $1350 an ounce.
Reserve price.
Our third key pillar at the capital allocation strategy is that we will continue to reinvest in growth.
<unk>, our internal exceptionally high return check my Cafe extension, Trippler expansion and hot Latin projects as well as the exciting exploration programs across the portfolio that we have dedicated more than $80 million and spend two this year.
We will remain dynamic in our approach to our share buyback and have capacity to repurchase up to 10.2 million additional shares on the recently announced buyback program before its exploration in June of 2024.
Company remains in a strong financial position and we expect further improvement into your end.
And now I'll turn the call over to Bill Alright, Executive Vice President of operations and sustainability to review the operation.
Ellison.
The pleasure to be here with you today on my first conference call with this morning.
Since joining the company at the beginning of the year.
Focused on operational improvement in efficiency and we spent the majority of my time at each pay a full color operations.
Alrighty I've come to respect the impressive talent and diversity of skill we have throughout the company.
I'm very appreciative of all the hard work that is <unk>.
At the same time see areas for improvement and we will continue to define and prioritize days as we up diarrhea of operating practices going forward.
The individual acids I Wanna start with a brief discussion about psyche.
Most important thing we do each and every day he's getting up <unk>.
<unk> value. This has always been a focus.
Now we are driving increase ladyship engagement and implementing simple tools to a nightclub painful.
What else. This is improving safety. It is also improving the quality of work and results in the field.
A side production delivery is an integral approach to a long term success.
The nail on the chopper.
The main the main delivered Q2 production of 52000 answers and an ice pick of 13 94 brands.
The cell phone plan to live in another strong quarter production throughputs, averaging nearly 7500 ton per die.
Shell casing the continued optimization of this asset.
The plane door to carve maintenance currently underway is on track to be completed this month.
As usual, we continued to upright second daughter club in Hawaii capacity during the madness.
Limiting the impact production in the third quarter.
The key word programs, but continue as scheduled including first production from check my temper extension, where Prestripping was initiated in the second quarter.
And first Gal production of 10 to 15000 ounces is expected this year.
We're also advancing work on the updated Uhm Technical report.
Work to diet is built on the Trs published in 2022.
With significant advance with were significantly pain, we know wedding assay results to support this technical report uptight, which means we will be in the position to publish the report in the first quarter of 2024, rather than light in fourth quarter of this year.
Expiration work continues across the district, including the regional targets, where we expanded a wound is shipped to 80 per cent in Q4 22.
We have a full suite of near and long term growth opportunities across the district that we will continue to advance.
Now on to slide 14.
The Merry go produced 60000 ounces and the second quota.
<unk> with the plan production profile.
At 16.
16, 56 per ramps and the second quota.
<unk> whole truck purchases the support by stripping activities.
Sustaining capital will trend downward significantly in the third and fourth quarters in line with fully gardens.
Mary Gal reminds on track for 2023 with late so it goes now returned to normal as the mind continue stacking <unk> that.
That was typical for the operation.
We are advancing technical work ahead of an updated lots of mine plan for Merry go where we I am to capture upside.
This includes incorporating more than two years of drilling.
In particular, new millennium into updated resource models for America.
Work is also on the way to evaluate potential longer term production pathways at the Trenton Kenyan in Buffalo value Valley targets at the southern end of the matter of golf property.
Yeah, I'm moving on to <unk>.
Savings.
The second quarter production was blood plan is demond work too I become the first quote a morning show up for resolving from the unplanned mindless Savage.
Accordingly drives remind below average in all expectations at the moment focused on getting the <unk> sequence on plan. So I've been up access the hard drive to start the second half.
Positively in the month of July save you take driving crazy and the mind just downright thousand ounces.
Positioning the operation for much stronger silk second half.
In addition to improve my performance, we expect costs to improve in the second half given the completion of spend on the winter Road in.
In the second quarter.
We continue to advance in the mind expiration as <unk> as we prioritize mineral resource conversion activities.
To ensure growth and MA and lots of extensions in the future.
I'm moving on to <unk>.
Then a delivered another strong quota.
With 2.3 million ounces of <unk>.
Option that I speak of $17 40 per ounce.
<unk> well on track for its full year gardens, and we anticipate improving cost performance in the second half.
Nemo and expiration continued in the second quota.
Really focused on Resourcing reserve expansion efforts as we are in good standing the loss of mine plan.
<unk> returned additional expiration success Dakota, Derose target Nathan Pirquitas smell.
Presenting a potential longer time Gaza target for the operation.
Moving on to slide seven eight.
Before hand back to Rod I wanted to reiterate my optimism for Apple <unk> and longer temperature <unk>.
<unk> and a very solid portfolio of operations in garage opportunities I'm thrilled to have a role in helping further improve and drug <unk>.
Right, Thanks, Bill and and Thanks Ellison edge of Hood spring a good position as you move into the second half of 23.
Generally the second quarter was a line to expectations and positively also included hardly accretive acquisition.
Up to 40% interest in the whole project.
While we were trying to lower into their consolidated production gardens to to the first half results with <unk> <unk>.
We expect significant improvement in a row.
Alrighty and financial results in the second half of the year.
We're also again to share the updated clinical reports to sure cause you'll get it growth potential across the portfolio.
So ensure with a number of value enhancing catalysts on the horizon.
The anticipation of improving production and free cashflow.
I'm in quarters.
My extremely optimistic.
Business.
So with that.
The call back over to the operators for any questions you might have thank you all for it.
Thank you Mister <unk>.
Joining a question Q faster than one on your telephone keypad.
Acknowledging your request if you're using a speaker phone please pick up your handset before pressing any key.
To withdraw your question.
Okay.
My first question is from Cosmos to let's see I D C. Please.
Please go ahead.
Thank you <unk>.
<unk> and Alex.
Maybe my first question is on your guide.
<unk> maintain your guidance at 700 to 780000 ounces.
<unk>, but you've also said you know training towards the lower and I just wanted to confirm or that you've already kind of answered my question here, but you know the one sort of factor that you had not anticipated.
And the the slower start to C. D is that why it's now trying to a lower and everything else is on target all the other assets just really C D.
Yeah, I think that's right cause the other if you remember in the first quarter, we talked about.
The underperformance with civilians and the reasons why.
And I clearly that put us on the on the back foot or if you remember.
Actually I also question, but I did sorry.
We would probably be difficult for us to call back to the original gardens facility being that's he'll true during the second quarter as well so as we look across the acids and how they're performing.
Actually quite fortunate.
The position, where <unk> given that performance, but we're right on track for the first half would expect if we get my Italian that sort of my mentor moving into.
To will be automated production grown ups with a low rent.
Mhm Okay.
That may be more specifically.
<unk> you know you've done $107, an ounce as well and of course have you tried any kind of 42 270000 houses for the year.
Work it out correctly.
Looks like you'll have to improve in Q3 and also Q for as well as you said two 455 per cent of the <unk>.
Have a production, but if I work at all Q3 has to improve as well I guess my question is brought you know it sounds like there's some maintenance that still needs to be completed in two three can you help me understand how Q3 is gonna be better. Thank you too is it a combination of you know check my temp a coming.
In or is it you know higher throughput could you just give me a bit more color.
Okay I'm gonna since we got bill in the room now and I can police like some of these questions. So that you won't get Netflix is one of the bill.
Thank you uhm.
Okay.
I appreciate the question so that we.
We have several draw a is heading indicates ray and then indicated for.
We've done some work with the all the clubs on the throughput right. So there's we've been improving day. The other thing that impacted the first half of the year was the at work. So I'd performance, we didn't actually ended up stacking as much material sweet painful moving.
Moving forward with plans to have that material be stacked and that will help increase as well and also we've got some very good work going on in terms of improving the uprising, Tom and the order class. So that's.
The minded so I told <unk> I'm going to be finished this ma'am, but it's gonna come in Donna.
Less time than we've traditionally done and there's also been some changes in what we do with maintenance, but that oxidizer since circuit. So several things day. So it is a it is an increase.
Focused on.
Working to deliver against it.
Alright.
And I don't know if this is related at.
You know from other companies.
There was heavy rainfall in Turkey, a and parts of Turkey and.
<unk> two is that part of why you're stacking of the off site voice impacted or <unk>.
<unk>.
<unk>.
We didn't we were in heavily impacted by the weather and Q2.
<unk> was purely about blending and having the right material that brought Tom site, where there wasn't an impact for us.
Sorry.
Maybe switching gears a little bit the same question a miracle you know solid quote is solid Q2 as expected.
You've done 112000 houses now in the first half slightly.
Slightly over you're targeting 262 290.
Once again, you know it sounds like the the beach cycle is now more normalised without someone finds that you saw last year.
But what's driving that increase again and <unk> is it is it <unk>.
<unk> is it is it you know the recovery that's coming out for what you've already stacked in Q1 and Q2 could you maybe again give us a bit more color in terms of.
<unk> <unk> <unk>.
Stacking right the big draw at a sidewalk display two three very important choice. So it's morning throw in the material, we're getting coming towards us as your site that we've normalized went through.
We had a positive return relative to the <unk>.
Challenged with that area that needed work with the phones material with virtually through that so now it's just really about the timing of the <unk> and the stacking right.
Right.
One last question again on something else sure <unk> at all I've I've always said I think that's very complementary physician that you've made rod.
I know you're looking you know working on the technical report, it's gonna come out next year alongside a decision in terms of you know building it or not.
But in the meantime, should we anticipate rod any kind of news flow.
<unk> now and then and then maybe you know against specifically you know you talked about financing options could you give us some insight in terms of what some of those options.
Yeah cause it's really the the work that we're doing.
Put us into a position to make a decision on the project is is just improving the the fidelity that we have around the project.
We are doing some infield really we're doing the work around the the flow shirts validation work rules are looking at <unk> thoughts on ways to improve to fly shows et cetera. So they weren't really be a lot of news flow to talk about here and.
The next.
The next little wall moving into to next year, because it will all be places of work that will be.
Running parallel together to come to a conclusion forest, but it really is just simply thinking about is confirmatory work for me I <unk> that we all have a lie experience of building the triple Sulfa plot.
And the approach that we took to building that plan with a sign saying there wherever they are deployed in some some positions. If it's all man makes it <unk> you know when we get going it started to to bring it out of the Grand we have a high level of comfort us to be very successful for it. So that's really what.
The emphasis will be there will be some some small works going on is is we sort of mentioned there is some early stage infrastructure works, we got some tunnelling going on to access the site. Some tunneling work that will be going on that sort itself to to put the axis.
The two the two sofa area.
But beyond that there there might be there won't be a whole lot more activity. So it's ramping up it's giving the teams in place.
Some drooling et cetera. So.
Really look forward to next year from a <unk> perspective, Palestine's I'm really busy at the moment as you can imagine there'll be she's my couple of trips to to to London already to pick up on the work that was already sort of under why by our joint venture partners and we expect.
Two two route to pick their work up to try to progress through to a project financing.
And if there's obviously any news flow coming from that between now and the actual decision to arm will obviously, let you know that that work will just disqualified.
Yes, I'm here to try to try to get the best terms as possible for the the problem is that we now have on the projects are I don't expect anything to come out of that to you in the next couple of months, who will probably be at best life and the year will probably early next year.
Mhm of course.
<unk> and sent Jim understood and thanks again for answering all my questions.
But don't you think cause.
Once again, if you have a question please press one.
One.
This concludes the question and answer session I'll turn the call back over to Mister <unk>.
Any closing remarks.
Alright, Thank you and thanks, everyone again for joining us today in participating in a cool.
And I look forward to talking to you again in another quota. Thank you bye bye.
This concludes your conference call. Please feel free to disconnect.
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