8-K: SSR Mining Reports Third Quarter 2024 Results Amidst Pler Mine Challenges

SSR Mining's third quarter results for 2024 were impacted by the ongoing suspension of operations at the pler mine and a temporary suspension at Seabee, while Puna and Marigold showed strong performance.

Summary

• SSR Mining reported its third quarter 2024 financial results, which were significantly affected by the February 13th incident at the pler mine, leading to its continued suspension.
• The company has focused on remediation at pler, spending $48.3 million in the third quarter and a total of $103.3 million since April 1, 2024.
• The pler remediation is estimated to cost between $250 and $300 million and take 24 to 36 months to complete.
• A local court cancelled the 2021 Environmental Impact Assessment (EIA) for pler, reverting operations to the 2014 EIA with a lower throughput rate of 6,000 tonnes per day.
• The company held $334.3 million in cash and $834 million in total liquidity at the end of the third quarter.
• Third quarter production was 97,429 gold equivalent ounces, with year-to-date production at 275,113 gold equivalent ounces.
• Net income attributable to SSR Mining shareholders was $10.6 million, or $0.05 per diluted share, while adjusted net income was $6.4 million, or $0.03 per diluted share.
• Operating cash flow was $(1.3) million, and free cash flow was $(34.1) million for the quarter.
• Marigold produced 48,189 ounces of gold in the third quarter and remains on track for full-year production guidance of 155,000 to 175,000 ounces.
• Seabee's operations were temporarily suspended due to forest fires, resulting in a production of 10,252 ounces of gold in the third quarter, with a full-year production guidance now at 65,000 to 70,000 ounces.
• Puna produced 2.9 million ounces of silver in the third quarter, with full-year production guidance increased to 10.0 to 10.5 million ounces.
• Approximately $10.9 million was spent at Hod Maden during the third quarter as the project advances towards a construction decision.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the ongoing issues at the pler mine, the temporary suspension at Seabee, and the negative cash flow. However, the strong performance of Puna and Marigold, along with the company's liquidity, provide some positive aspects.

Positives

• All nine missing colleagues from the pler incident have been recovered and returned to their families.
• Containment infrastructure at pler is proving effective, with no recordable contamination to local soil, water, or air.
• Puna achieved a second consecutive quarterly record for process plant throughput, averaging over 5,275 tonnes per day.
• Marigold remains on track to meet its full-year production guidance.
• Puna's full-year production guidance has been increased due to higher throughputs and grades.
• The company has a strong liquidity position with $834 million available.
• The company is in compliance with its debt covenants.

Negatives

• The pler mine remains suspended following the February 13th incident.
• The cancellation of the 2021 EIA for pler has resulted in a lower throughput rate of 6,000 tonnes per day.
• Seabee operations were temporarily suspended due to forest fires, impacting production.
• The company reported a negative operating cash flow of $(1.3) million and a negative free cash flow of $(34.1) million for the quarter.
• The company has incurred significant care and maintenance costs at pler and Seabee.
• The company has incurred significant remediation costs at pler.
• The company has reduced production guidance for Seabee.

Risks

• The ongoing suspension of operations at the pler mine poses a significant risk to the company's production and financial performance.
• The legal challenge and cancellation of the 2021 EIA at pler introduces uncertainty and operational constraints.
• The remediation of the pler site is a complex and costly undertaking, with an estimated cost of $250 to $300 million and a timeline of 24 to 36 months.
• The company faces risks related to regulatory approvals for the restart of the pler mine.
• The company is exposed to risks related to forest fires, as demonstrated by the temporary suspension of operations at Seabee.
• The company is exposed to risks related to commodity prices, particularly gold and silver.
• The company is exposed to risks related to inflationary pressures on costs.

Future Outlook

The company anticipates strong free cash flow generation from Marigold, Seabee, and Puna in the fourth quarter of 2024 and is focused on advancing the Hod Maden project. The company is working towards a potential restart of operations at pler, but cannot estimate when or under what conditions this will occur. The company will provide guidance on its expected 2025 capital spend at Hod Maden with its annual 2025 guidance.

Management Comments

• The company is continuing discussions with Turkish government officials around the final remediation plan for pler.
• The company is working closely with relevant authorities to advance the required permits for the restart of the pler mine.
• The company remains well positioned to continue remediation efforts ahead of a potential restart of operations at pler.

Industry Context

The report highlights the challenges faced by mining companies in managing operational disruptions and regulatory hurdles. The pler incident and subsequent legal challenges underscore the importance of robust environmental impact assessments and operational safety protocols. The temporary suspension at Seabee due to forest fires highlights the vulnerability of mining operations to external factors. The strong performance of Puna and Marigold demonstrates the potential for diversified operations to mitigate risks.

Comparison to Industry Standards

• SSR Mining's AISC for gold production at Marigold ($1,828/oz) and Seabee ($2,301/oz) in Q3 2024 are higher than some of its peers, such as Newmont (AISC of $1,444/oz in Q3 2024) and Barrick Gold (AISC of $1,308/oz in Q3 2024), indicating higher operating costs at these mines.
• Puna's AISC for silver production ($15.37/oz) is competitive with other silver producers like Pan American Silver (AISC of $15.50/oz in Q3 2024), suggesting efficient operations at this mine.
• The pler incident and its associated costs are a significant outlier compared to industry standards, highlighting the unique challenges faced by SSR Mining.
• The company's liquidity position of $834 million is relatively strong compared to some smaller mining companies, but lower than major producers like Newmont and Barrick Gold, which have billions in liquidity.
• The increase in Puna's production guidance to 10.0 to 10.5 million ounces of silver is a positive development, indicating strong operational performance compared to its initial expectations.

Legal Proceedings

• A legal challenge was filed against the pler mine's environmental impact assessment, which was approved in 2021.
• The local court issued a decision cancelling the 2021 EIA due to insufficiencies in the approval process.
• The Turkish Ministry of Environment, Urbanization and Climate Change has filed an appeal of the decision, and the Company has filed a simultaneous intervener appeal as well.

Stakeholder Impact

• Shareholders are negatively impacted by the suspension of operations at pler and the resulting financial losses.
• Employees at pler have been affected by the suspension of operations.
• The local community near pler has been impacted by the incident and the ongoing remediation efforts.
• Customers may be affected by the reduced production of gold and silver.
• Suppliers may be affected by the reduced activity at the pler mine.

Next Steps

• The company will continue remediation efforts at the pler mine.
• The company will work to obtain the necessary regulatory approvals for the restart of the pler mine.
• The company will continue to advance the Hod Maden project.
• The company will provide guidance on its expected 2025 capital spend at Hod Maden with its annual 2025 guidance.

Key Dates

Keywords

SSR Mining, pler mine, gold production, silver production, remediation, mining, financial results, Marigold, Seabee, Puna, environmental impact assessment, operating cash flow, free cash flow, liquidity, Hod Maden