Q3 2024 SSR Mining Inc Earnings Call
The Big Bang Boom!
Speaker Change: Hello everyone and welcome to SSR Mynings 3rd Quarter 2024 financial 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 Alex Hunchak or Messe Armani.
Alex Hunchak: Thank you, operator and hello everyone. Thank you for joining today's conference call during which we'll provide enough big on the children's. As well as it is a review of our third quarter financial result.
Alex Hunchak: are consulted with financial statements that have been presented in accordance with the US gap. These financial statements have been filed on Edgar, St. Ar, DASX, 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 our news release will end with this call.
Alex Hunchak: Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated.
Alex Hunchak: 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.
Please see our press release for information about the Comparable Gap Measure.
Alex Hunchak: Rod Antal, Executive Chairman, will be joined by Michael Sparks, Chief Financial Officer, and Bill MacNevin, EVP Operations and Sustainability on today's call. I will now turn the line over to Rod.
Alex Hunchak: Thanks for watching!
Rod Antal: All right, thanks Alex and thanks for everyone for joining us today.
Speaker Change: I'm going to start today's call with an update on Chirpla, 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.
Speaker Change: At Scherpler, we've made good progress on the four key priorities since the incident.
Speaker Change: These have been, first, the recovery of our missing colleagues, two, the containment and remediation of the site, third, the investigation into the root cause of the heap leach failure, and fourth, preparing for the restart of the Cherblour mine.
Speaker Change: With respect to our missing colleagues, all nine individuals have been recovered and returned to their families.
Speaker Change: We are continuing to support the families and the community members impacted by the Chirpler incident.
Speaker Change: For more information, visit www.FEMA.gov
Speaker Change: Second, all of the planned containment infrastructure has been successfully installed and are proving to be effective.
Speaker Change: 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.
Speaker Change: In partnership with the Turkish authorities, we have continued to progress the remediation at site.
Speaker Change: The 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.
Speaker Change: 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.
Speaker Change: We're continuing discussions with the Turkish government officials around the final remediation plan including the approval and construction of the e-storage facility which will permanently close, which will permanently store all of this display as material.
Speaker Change: The Chirpler remediation and containment work is estimated to cost between $250 to $300 million and take a total of 24 to 36 months to complete.
Speaker Change: in the third quarter of 2024.
Speaker Change: $48 million was spent on remediation activities at Chirplow, bringing total remediation spend since April 1 to $103 million.
Speaker Change: Third, on the incident investigation.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: the investigations.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: And the last point, with respect to a potential race time.
Speaker Change: We continue to work closely with the relevant authorities to advance the required permits for the restart of the Church of Limon.
Speaker Change: 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.
Speaker Change: 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 entertaining costs of $2,065 per ounce.
Speaker Change: which includes cash, care, and maintenance costs incurred at both Chirpler and CB, representing approximately $252 an ounce.
Speaker Change: 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.
Speaker Change: 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 Houghton Madden continue to progress.
Speaker Change: On to slide 5 for a brief look at the financial results.
Speaker Change: We recorded a tributal 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 recorded in the quarter.
Speaker Change: 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.
Speaker Change: including the remediation spend at Terpler, third quarter cash generated by operating activities was negative 1 million dollars while free cash flow was negative 34 million dollars.
Speaker Change: We finished the quarter with $334 million in total cash and a net cash position of $104 million and total liquidity of $834 million.
Speaker Change: 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.
Speaker Change: On to slide 7 to discuss the operations, where Bill will start with Marigold.
Bill: Thanks Michael. Marigold's third quarter production of 48,000 ounces was in line with expectations.
Speaker Change: 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.
Speaker Change: However, we now expect increased full year costs, due predominantly to increased royalty costs and higher than expected maintenance component costs.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Thankfully none of our employees were injured by these fires and the process plan and Sandtime line were not materially impacted.
Speaker Change: While some remote equipment, including power poles, piping and exploration equipment, was damaged, operations were fully restarted on October 11.
Speaker Change: 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.
Speaker Change: CB 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.
Speaker Change: The bulky targets represent a potential mine life extension opportunity and the CB team is aggressively advancing technical studies to better delineate the opportunity.
Speaker Change: 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.
Speaker Change: Now on to Puna.
Speaker Change: Burnett produced 2.9 million ounces of silver in the third quarter, reflecting a second consecutive quarter of record throughputs for the percatus processing facility.
Speaker Change: 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 1 million ounces of silver on a midpoint basis.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Ovais Habib, Carey MacRury,
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: To date, our work continues to demonstrate an exceptionally high quality asset that will be a key contributor to our portfolio going forward.
Speaker Change: So, with that, I'm going to turn over the call to the operator for any questions you may have. Thank you.
Speaker Change: For more information, visit www.FEMA.gov
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 one using a touch-tone telephone. To withdraw your question, you may press star and two.
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: For more information, visit www.FEMA.gov
Speaker Change: Our first question today comes from...
Speaker Change: 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.
Oveis Rabib: 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.
Speaker Change: 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 follow on that would be appreciated.
Speaker Change: Thanks for watching!
Speaker Change: Thanks, you guys.
Speaker Change: The key point is we have substantially all the materials out of the Siberli 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 so
Speaker Change: Since that day we've been
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 End
Speaker Change: permanent storage facility, but also DeFato from an engineering
Speaker Change: perspective.
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's been ongoing, OVAS, and the location was chosen, which is good, which is we've termed the storage facility. The engineering has progressed, 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. 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...
Speaker Change: Thanks for joining us.
Speaker Change: Thank you for watching!
Speaker Change: Thanks for that, Raja.
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: 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 throughput 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, Rod. 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: Thanks for watching!
Speaker Change: It's not dependent on all of the remediation or other efforts around it, it's...
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 Sherbler 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 to evolve. So it's not necessarily all...
Speaker Change: 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 one. So with all your questions, you may press star and two.
Speaker Change: Thank you for watching!
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