Q3 2024 SSR Mining Inc Earnings Call
Speaker Change: Hello everyone and welcome to SSR Mindings 3rd Quarter 2021 by the Antal Results Conference Call.
Speaker Change: This call is being recorded.
Speaker Change: At this time, we're opening remarks and introductions. I would like to turn the conference call over to our Tunchak or MESSA SIR mining.
Speaker Change: Thank you, operator and hello everyone. Thank you for joining today's conference call during which we will provide enough to be on the show for incident, as well as it will review of our third quarter financial result.
Speaker Change: are consulted with financial statements that have been presented in accordance with the US gap. These financial statements have been filed on Edgar, Peter, the ASX and are also available on our website. To accompany our call, there is an online webcast and you will find information to access the webcast and I'm using it to release your latest calls.
Speaker Change: Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated.
Speaker Change: Today's discussion will include four looking statements, so please read the disclosures in the relevant documents. Additionally, we will refer to non-GAAP financial measures during our discussion and in the accompanying slides.
Speaker Change: Please see our press release for information about the Comparable Gap Measures.
Speaker Change: Rod Antal, Executive Chairman, will be joined by Michael Sparks, Chief Financial Officer, and Bill MacNevin, EVP, Operations and Sustainability, on today's call.
Speaker Change: I will now turn the line over to Rod.
Rod: All right. Thanks, Alex, and thanks for everyone for joining us today.
Rod: I'm going to start today's call with an update on Sherpa, summarising the work completed to date and the key areas of focus going forward. We will then provide an update on the third quarter financial results and operational highlights from Marigold, CB and Puna.
Rod: At Sherpa, we've made good progress on the four key priorities since the incident.
Rod: These have been, first, the recovery of our missing colleagues.
Rod: 2. The containment and remediation of the site 3. The investigation into the root cause of the heap leach failure 4. Preparing for the restart of the Cherblour mine
Rod: With respect to our missing colleagues, all nine individuals have been recovered and returned to their families.
Rod: We are continuing to support the families and the community members impacted by the Chirpler incident.
Rod: Public Statements from the Turkish government officials continue to reiterate that there has been no recordable contamination to local soil, water or air in the sampling locations.
Rod: In partnership with the Turkish authorities, we have continued to progress the remediation at site.
Rod: Progress has been made to date with over 16 million tonnes of the displaced heap leach material moved into temporary storage locations, including substantially all the displaced material from the Suburley Valley.
Rod: As part of the remediation work, and as previously disclosed, the heap leach pad will be permanently closed and no future heap leach processing will take place at Sherblo.
Rod: We're continuing discussions with the Turkish government officials around the final remediation plan including the approval and construction of the storage facility which will permanently close, which will permanently store all of this displaced material.
Rod: The Chirpwell remediation and containment work is estimated to cost between $250 million to $300 million and take a total of 24 to 36 months to complete.
Rod: $48 million was spent on remediation activities at Chirplow, bringing total remediation spend since April 1 to $103 million.
Rod: Third, on the incident investigation.
Rod: The initial design of the heap leach facility prepared prior to commencing production in 2010 and each subsequent expansion thereafter was engineered, reviewed and approved by independent third-party engineering firms.
Rod: Throughout the various stages of construction across the life of the Heap Leach facility, third-party reviews were also conducted to ensure conformance with underlying engineering design parameters.
Rod: the investigations.
Rod: into the cause of the Cherbler incident began shortly after the event.
Speaker Change: We commission independent experts to review the design, construction and operations of the Heathledge facility.
Rod: To date, this review has not identified any material non-conformance with the construction or operation of the heap leach facility relative to third-party engineer design parameters.
Rod: And the last point with respect to a potential race time.
Rod: We continue to work closely with the relevant authorities to advance the required permits for the restart of the Churb-Le-Monde.
Rod: Once all regulatory approvals, including the operating permits, are reinstated, it is anticipated that the initial operations at Cherbourg could restart within 20 days from that point.
Rod: So now let's move on to slide four, where Michael will discuss the third quarter results.
Michael Sparks: Thanks Rod and good afternoon everyone. Third quarter 2024 production was 97,000 gold equivalent ounces at all sustaining costs of $2,065 per ounce.
Rod: which includes cash, care, and maintenance costs incurred at both Chirpler and CB, representing approximately $252 an ounce.
Rod: C.B. was placed into temporary care and maintenance due to forest fires on August 21st and operations were subsequently restarted on October 11th. Year to date, Marigold, C.B. and Puna have combined to produce 249,000 gold equivalent ounces.
Rod: During the quarter, we continue to advance brownfield exploration programs at Marigold, Seabee, and Puna, which Bill will discuss later. Additionally, site establishment and engineering activities at Hod Madden continue to progress.
Rod: On to slide 5 for a brief look at the financial results.
Rod: We recorded a tributable net income of $0.05 per share in the third quarter, while adjusted net income per share was $0.03, largely reflecting the exclusion of minor tax and foreign exchange gains according to quarter.
Rod: As a reminder, we do not adjust for care and maintenance costs, and the full impact of these expenses of both CHRPLR and CB are included in our adjusted net income.
Rod: including the remediation spend at Turpler, third-quarter cash generated by operating activities was negative $1 million, while free cash flow was negative $34 million.
Rod: We finished the quarter with $334 million in total cash and a net cash position of $104 million and total liquidity of $834 million.
Rod: With our existing liquidity and an outlook for improved production and free cash flow generation in the fourth quarter, we remain in a strong position financially and are well positioned to manage the remediation costs at Chirpler, as well as continue our reinvestment needs across the business.
Rod: On to slide 7 to discuss the operations, where Bill will start with Marigold.
Bill MacNevin: Thanks Michael. Marigold's third quarter production of 48,000 ounces was in line with expectations.
Bill MacNevin: As the 2024 Mine Plan calls for, the fourth quarter has the lowest production and highest costs of the year. Marigold remains on track to meet its full year production guidance of 155,000 to 175,000 ounces.
Rod: However, we now expect increased full year costs, due predominantly to increased royalty costs and higher than expected maintenance component costs.
Rod: Of the increase to Marigold's ASIC guidance, approximately 60% is associated with higher royalty costs, resulting from the strong gold price in 2024. We expect both of these cost pressures to persist into 2025.
Rod: Brownfield exploration and desktop studies at Buffalo Valley advanced during the quarter as we look to continue to replace mine depletion and potentially further expand Marigold's operating life.
Stevie: Now on to Stevie.
Stevie: At Seabee, third quarter production of 10,000 ounces reflected the temporary suspension of operations on August 21st due to forest fires in the vicinity of the mine.
Rod: Thankfully none of our employees were injured by these fires and the process plan and Sandtime line were not materially impacted.
Rod: While some remote equipment, including power poles, piping and exploration equipment was damaged, operations were fully restarted on October 11.
Rod: Due to the suspension, CB's full year 2024 guidance is now 65,000 to 70,000 ounces at ASIC of $17.25 to $17.55 per ounce.
Rod: DB continues the focus on evaluating and drilling near mine extensions to existing underground mineralization as well as the continued advancement of the Porky and Porky West targets.
Rod: The bulky targets represent a potential mine life extension opportunity, and the CB team is aggressively advancing technical studies to better delineate the opportunity.
Rod: While the surface drilling program was impacted by forest fires in the third quarter, the vegetation cover cleared by the fires has provided our exploration team with new opportunities to evaluate surface targets in the coming field seasons.
Rod: Now on to Boone.
Rod: Burnham produced 2.9 million ounces of silver in the third quarter, reflecting a second consecutive quarter of record throughputs for the Piquita's processing facility.
Rod: Owing to strong operating results over the last two quarters, Perna is now expected to produce 10 to 10.5 million ounces of silver in 2024, an increase of more than one million ounces of silver on a midpoint basis.
Rod: While Perna's full year cost expectations are unchanged, the ASIC of $15.37 per ounce in the third quarter demonstrated Perna's significant free cash flow margins in the current silver price environment.
Rod: In addition, exploration and technical work continues to evaluate opportunities to extend operations at Puna through potential extensions at Chinchillas and continued advancement of the Cotaderas target through near mine drilling.
Speaker Change: Now we'll turn back to Rob for closing remarks.
Rob: Thanks Michael and thanks Bill. As I mentioned, we set out four commitments following the Chirpler incident. These commitments are important milestones in the path towards a potential restart of the operation and I mentioned we continue to make good progress on all the fronts.
Rob: We are looking forward to a strong close to the year at each of Marigold, Seabean, Poona, and will continue to advance opportunities to improve our business through operational excellence, initiatives and brownfields growth projects as we move into 2025.
Rob: As Michael mentioned, we have continued to advance Hod Madden and we expect to provide an update on our anticipated 2025 capital spend at the project with our normal guidance update early next year.
Rob: To date, our work continues to demonstrate an exceptionally high quality asset that will be a key contributor to our portfolio going forward. So with that, I'm going to turn over the call to the operator for any questions you may have.
Speaker Change: Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then 1 using a touch-tone telephone. To withdraw your question, you may press star and 2.
Speaker Change: If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.
Speaker Change: Once again, in order to ask a question, please press star and 1.
Speaker Change: Our first question today comes from
Rob: Oveis Rabib from Scotiabank, please go ahead with your question.
Oveis Rabib: Hi Rod and SSR team. Just a couple of questions from me. Starting off just on the Chopra remediation.
Speaker Change: You've talked about you know obviously this temporary storage facility right now and then obviously you're going to go to a more permanent storage facility at one point.
Oveis Rabib: What kind of you know, I mean in terms of you know, you're waiting for I guess approvals What kind of approvals do you need? Are there permits required? Anything else that you need kind of to go forward with that? Any sort of color on that would be appreciated
Speaker Change: Okay, thanks, you guys.
Speaker Change: I think the pleasing status of where we are right now from a remediation perspective is
Speaker Change: The key point is that substantially all the material is out of the Siberian Valley.
Speaker Change: So that's really the good news.
Speaker Change: And, of course, you know, we'll...
Speaker Change: When the incident happened, we didn't have a final sort of design for what the ultimate storage facility would be, and nor did we expect that we'd have to recreate one.
Speaker Change: in consultation with the government going through the various options.
Speaker Change: that we had to...
Speaker Change: not only locate.
Speaker Change: The
Speaker Change: permanent storage facility, but also DeFato from an engineering
Speaker Change: to stay deep. Thank you. Thank you.
Speaker Change: as well as meeting the commitments from the Turkish regulations of what the requirements are for a full closure. So all of that work has been ongoing over the years and the location was chosen, which is good, which is we've termed the storage facility. The engineering has progressed.
Speaker Change: The discussions are going on with the regulators to ensure that we have met all of the requirements.
Speaker Change: as well, and remember this will be the first closure of this type in country, so we're making sure that we're taking all the right steps.
Speaker Change: And once that's all done, the approvals will be forthcoming. So we do expect that early next year, and then from that point, we'll start the efforts around the construction and then moving the materials in the temporary locations to the permanent one.
Speaker Change: Thanks for that, Raj. In terms of the EIA, in terms of
Speaker Change: Now you're kind of reverting back, I believe, to the 2012 EIA.
Speaker Change: And it's kind of, you know, talking about 6,000 tons per day versus the 9,000 tons per day that was in the 2021 EIA. Assuming, you know, you get all the necessary approvals to restart, would you be looking at a restart at that 6,000 tons per day then versus the 9,000?
Speaker Change: There's some clarity there. Yeah, yeah, that's correct, Obeis. I think, look, there'll be...
Speaker Change: The cancellation, as we've disclosed, was an administrative...
Speaker Change: appeal and accords.
Speaker Change: with the appropriate government departments. So that is continuing in the background. But the default position is back to the 2014 EIA, which limits the triple rates to 6,000 tonnes per day. So that'll be the...
Speaker Change: Assuming all things being equal, as we know it today, that would be the fallback position.
Speaker Change: and we'll plan on those accordingly and then in the future we would, we have to anyway, do a EIA refresh in the future and that will just accelerate those efforts moving into next year.
Speaker Change: Thanks for that, Rodney. And just a last question for me, in terms of any sort of restart over here, with your discussions that you're having with the regulators,
Speaker Change: Does the restart have to wait till all remediation is complete or can you restart while the remediation is taking place?
Speaker Change: It's not dependent on all of the remediation or other efforts around it.
Speaker Change: The discussions that we've had, and as I sort of mentioned, I think all of the efforts that we've, you know,
Speaker Change: had it underway and are currently underway, and some are completed, some are still ongoing, at Chirplow are really a precursor to those conversations and
Speaker Change: As you can imagine, actively and continually, there's many levels of government that those conversations are continuing.
Speaker Change: to evolve. So it's not necessarily all on the condition that we finish all this work but it helps while we're having those conversations because we're acting out our commitments.
Speaker Change: to make good post the Chirpler incident and we'll continue to have the dialogue with the various government departments to ultimately achieve a restarted Chirpler.
Speaker Change: Perfect. Thanks for that Rod. That's all my questions.
Speaker Change: Appreciate it. Thanks, everybody.
Speaker Change: And once again, if you would like to ask a question, please press star and then 1. To withdraw your question, you may press star and 2.
Speaker Change: Ladies and gentlemen, and showing no additional questions, at this time we'll close today's question and answer session, as well as today's conference call. We do thank you for joining the presentation. You may now disconnect your lines.