8-K: SSR Mining Reports Fourth Quarter and Full-Year 2023 Results Amidst Pler Mine Incident

SSR Mining reported its fourth quarter and full-year 2023 financial results, overshadowed by a significant operational incident at its pler mine, which has led to the suspension of operations and retraction of future guidance.

Summary

• SSR Mining released its financial results for the fourth quarter and full year of 2023, with a significant focus on the impact of a heap leach pad slip at the pler mine on February 13, 2024.
• The pler incident resulted in the suspension of operations, nine missing personnel, and the retraction of 2024 and long-term guidance for pler and Trkiye.
• The company is assessing the financial impacts of the incident, including potential remediation costs, asset impairments, and inventory write-downs.
• Despite the pler incident, SSR Mining reported a year-end 2023 cash balance of nearly $500 million and continued cash flow from its Marigold, Seabee, and Puna operations.
• Fourth quarter 2023 production was 211,226 gold equivalent ounces at a cost of sales of $1,064 per gold equivalent ounce and AISC of $1,326 per gold equivalent ounce.
• For the full year 2023, production was 706,894 gold equivalent ounces at a cost of sales of $1,141 per gold equivalent ounce and AISC of $1,461 per gold equivalent ounce.
• The company reported an attributable net loss of $217.8 million in the fourth quarter of 2023, largely due to a non-cash impairment at pler, but an adjusted attributable net income of $127.1 million.
• For the full year 2023, the attributable net loss was $98.0 million, with an adjusted attributable net income of $276.5 million.
• SSR Mining returned $114.0 million to shareholders in 2023, but has suspended dividend payments and share repurchases due to the pler incident.
• The company had a cash and cash equivalent balance of $492.4 million and a net cash position of $261.6 million as of December 31, 2023.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the tragic incident at pler, the suspension of operations, the retraction of guidance, and the potential financial impacts. While some operations performed well, the overall outlook is uncertain and concerning.

Positives

• SSR Mining had a strong cash position of nearly $500 million at the end of 2023.
• Marigold achieved record gold production in 2023.
• Puna exceeded its full-year silver production guidance.
• Seabee had strong grades of over 10.1 g/t in the fourth quarter of 2023.
• The company's operations at Marigold, Seabee, and Puna continue to generate cash flow.
• The Turkish government's environmental monitoring has shown negative results for potential contamination to date.

Negatives

• The pler mine incident has resulted in the suspension of operations and nine missing personnel.
• The company has retracted its 2024 and long-term guidance for pler and Trkiye.
• Dividend payments and share repurchases have been suspended.
• A significant non-cash impairment charge was recorded at pler.
• The company anticipates recording a remediation liability and impairment of inventory and specific assets in the first quarter of 2024.
• The company recorded a write-down of $50 million in goodwill at Seabee.

Risks

• The pler incident poses significant operational, financial, and legal risks to the company.
• The company is unable to estimate when operations at pler will resume.
• There is uncertainty regarding the extent of remediation costs and asset impairments.
• The suspension of operations at pler will impact future production and cash flow.
• The company faces potential legal challenges and regulatory actions related to the pler incident.
• The company's future performance is subject to commodity price fluctuations and other market risks.

Future Outlook

Due to the pler incident, the company has retracted all previously issued operating and cost guidance for pler and its operations and projects in Trkiye and will revisit forward-looking guidance at an appropriate future date. The company has provided 2024 guidance excluding pler and Hod Maden.

Management Comments

• Rod Antal, Executive Chairman of SSR Mining, stated that the company's attention is focused on pler and expressed sympathy for the families, friends, and colleagues of the missing personnel.
• Management noted that initial discussions and technical support are progressing to agree on the ultimate permanent location for the heap leach material that has been displaced from the heap leach pad.
• Management stated that while they continue to assess the impact of the pler Incident, they do not anticipate any near-term liquidity concerns.

Industry Context

The incident at the pler mine highlights the inherent risks associated with mining operations, particularly heap leach facilities. The suspension of operations and the need for remediation will likely impact SSR Mining's production and financial performance in the near term. The company's response to the incident and its ability to manage the remediation process will be closely watched by investors and industry peers.

Comparison to Industry Standards

• SSR Mining's AISC of $1,461 per gold equivalent ounce for 2023 is within the range of other mid-tier gold producers, but the pler incident will likely impact future costs.
• Marigold's record production of 278,488 ounces of gold in 2023 demonstrates strong operational performance compared to its historical output.
• Puna's silver production of 9.7 million ounces exceeding guidance indicates a strong performance relative to its peers in the silver mining sector.
• The suspension of operations at pler is a significant event that will likely lead to a decrease in production and an increase in costs, which will be a negative deviation from industry standards.
• The company's cash position of nearly $500 million is relatively strong compared to other mid-tier mining companies, providing some financial flexibility to manage the pler incident.

Management Changes

Stakeholder Impact

• Shareholders will be impacted by the suspension of dividends and share repurchases, as well as the potential for decreased profitability and share price volatility.
• Employees at the pler mine are directly affected by the suspension of operations and the uncertainty surrounding their jobs.
• The families and friends of the missing personnel are experiencing significant stress and uncertainty.
• The local communities near the pler mine may be impacted by the environmental and social consequences of the incident.
• Suppliers and contractors to the pler mine will be affected by the suspension of operations.

Next Steps

• The company will continue to assess the impact of the pler incident on its business, cash flows, results of operations, and financial condition.
• SSR Mining will evaluate the estimated remediation costs and anticipates recording a remediation liability during the first quarter of 2024.
• The company will evaluate the pler long-lived asset group for additional impairment during the first quarter of 2024.
• SSR Mining will revisit the forward-looking guidance at an appropriate future date.
• The company will provide further updates on the situation at pler on its website.

Key Dates

Keywords

SSR Mining, pler Incident, Gold Production, Financial Results, Mining, Heap Leach Pad, Impairment, Dividend Suspension, Cash Flow, Remediation, Guidance Retraction