8-K: SSR Mining Reports First Quarter 2024 Results Amidst Pler Incident Aftermath

SSR Mining's first quarter results were significantly impacted by the Pler incident, with a net loss of $287.1 million, though adjusted net income was $22.5 million.

Summary

• SSR Mining reported a net loss of $287.1 million for the first quarter of 2024, or $1.42 per diluted share, primarily due to the Pler incident.
• The loss includes $272.9 million in reclamation and remediation costs, $114.2 million in non-cash impairment charges, and $15.3 million in contingency costs related to the Pler incident.
• Adjusted net income for the quarter was $22.5 million, or $0.11 per diluted share.
• The company produced 101,873 gold equivalent ounces at a cost of sales of $1,166 per payable ounce and AISC of $1,569 per payable ounce.
• Excluding Pler, the company expects to produce 340,000 to 380,000 gold equivalent ounces in 2024 from Marigold, Seabee, and Puna.
• Remediation efforts at Pler are expected to cost between $250 to $300 million, in addition to the $22.5 million already incurred.
• The company has a cash position of $467 million and access to a $400 million revolving credit facility to fund these costs.
• The heap leach pad at Pler will be permanently closed, and future processing will be through the sulfide plant using stockpiled material.
• Sulfide stockpiles at Pler total 10.8 million tonnes of ore at a grade of 2.0 grams per tonne gold, or approximately 706,000 contained ounces.
• Marigold produced 34,680 ounces of gold, Seabee produced 23,773 ounces of gold, and Puna produced 1.9 million ounces of silver in the first quarter.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the significant financial losses and operational disruptions caused by the Pler incident. While the company has a strong cash position, the uncertainty surrounding the Pler remediation and restart, along with the substantial costs, weighs heavily on the outlook.

Positives

• SSR Mining has a strong cash position of $467 million and access to a $400 million revolving credit facility.
• The company's adjusted net income was $22.5 million, or $0.11 per diluted share, indicating underlying profitability.
• Marigold, Seabee, and Puna are expected to produce a combined 340,000 to 380,000 gold equivalent ounces in 2024.
• Seabee's cost of sales was $859 per payable ounce and AISC was $1,416 per payable ounce, showing strong performance.
• The company is progressing a remediation plan for Pler in consultation with Turkish government agencies and experts.

Negatives

• SSR Mining reported a significant net loss of $287.1 million in Q1 2024.
• The Pler incident resulted in $272.9 million in reclamation and remediation costs, $114.2 million in non-cash impairment charges, and $15.3 million in contingency costs.
• The heap leach pad at Pler will be permanently closed.
• Operations at Pler are suspended, and the company cannot estimate when they will resume.
• First quarter production was impacted by the Pler incident, with a total of 101,873 gold equivalent ounces produced.
• Free cash flow was negative $9.4 million, or negative $1.8 million before working capital adjustments.

Risks

• The Pler incident poses significant financial and operational risks, including substantial remediation costs and an uncertain timeline for resuming operations.
• The company faces regulatory risks in obtaining necessary approvals to restart operations at Pler.
• The company's financial results are heavily impacted by the Pler incident, leading to a significant net loss.
• There is a risk of further delays or cost overruns in the remediation process at Pler.
• The company's production guidance is dependent on the performance of Marigold, Seabee, and Puna, and any issues at these sites could impact overall results.

Future Outlook

The company expects Marigold, Seabee, and Puna to produce a combined 340,000 to 380,000 gold equivalent ounces in 2024, excluding Pler. The remediation of the Pler site is expected to take 24 to 36 months. The company is not able to estimate when and under what conditions operations will resume at Pler.

Management Comments

• Our primary focus at Pler continues to be the return of our missing colleagues to their families.
• The remediation plan will be submitted for government approval in the second quarter of 2024.
• The design of the storage facility is capable of containing the approximately 18 to 20 million tonnes of displaced material.
• The remediation work is expected to cost between $250 to $300 million on a 100% basis.
• The heap leach pad will be permanently closed and no further heap leach processing will take place at Pler.
• Once all necessary regulatory approvals are reinstated, it is anticipated that initial ore processing at Pler will occur exclusively through the sulfide plant.

Industry Context

The mining industry is facing increased scrutiny regarding environmental and safety practices, and this incident at Pler highlights the risks associated with heap leach operations. The company's response and remediation efforts will be closely watched by investors and regulators. The focus on sulfide processing at Pler is a shift from traditional heap leach methods, which may be a trend in the industry.

Comparison to Industry Standards

• SSR Mining's Q1 2024 results are significantly impacted by the Pler incident, making direct comparisons to peers difficult.
• Companies like Newmont and Barrick Gold, which are larger diversified miners, typically report more stable results due to their broader asset base.
• SSR Mining's AISC of $1,569 per gold equivalent ounce is higher than the industry average, which is typically around $1,200 to $1,400 per ounce, but this is heavily influenced by the Pler incident.
• Other mid-tier gold producers like Kinross Gold and Agnico Eagle Mines have reported lower AISC in recent quarters, but they have not experienced similar operational disruptions.
• The remediation costs of $250 to $300 million are substantial and will likely impact SSR Mining's financial performance for the next few years, which is not typical for most mining companies.

Stakeholder Impact

• Shareholders are negatively impacted by the significant net loss and uncertainty surrounding the Pler operations.
• Employees at Pler are affected by the suspension of operations and the ongoing recovery efforts.
• The local community in Turkey is impacted by the environmental incident and the company's remediation efforts.
• Suppliers and contractors are affected by the suspension of operations at Pler.
• Creditors are impacted by the company's increased financial risk due to the Pler incident.

Next Steps

• The company will submit a remediation plan for Pler to the Turkish government for approval in the second quarter of 2024.
• The company will continue recovery efforts for the remaining missing colleagues at Pler.
• The company will focus on completing the removal of displaced heap leach material from the Sabrl Valley by the third quarter of 2024.
• The company will continue to advance engineering, execution planning activities and technical studies for the Hod Maden project.
• The company will provide further updates on the Pler incident through press releases and website posts.

Key Dates

Keywords

SSR Mining, Pler Incident, Gold Production, Remediation, Financial Results, Mining, Heap Leach, Sulfide Plant, Impairment, Operating Costs