8-K: SSR Mining to Acquire Cripple Creek & Victor Gold Mine from Newmont for Up to $275 Million

SSR Mining has agreed to purchase the Cripple Creek & Victor Gold Mine from Newmont for $100 million upfront and up to $175 million in milestone payments.

Summary

• SSR Mining Inc. has entered into a definitive agreement to acquire the Cripple Creek & Victor Gold Mine (CC&V) from Newmont Corporation.
• The purchase price includes a $100 million cash payment at closing and up to $175 million in additional milestone-based payments.
• The milestone payments include $87.5 million upon final approval of an amendment to the CC&V Cresson permit and up to $87.5 million upon obtaining regulatory relief for the Carlton Tunnel.
• SSR Mining will also be responsible for 10% of incremental closure costs exceeding $500 million, with Newmont covering the remaining 90%.
• The transaction is expected to close in the first quarter of 2025, pending regulatory approvals and customary closing conditions.
• The agreement includes termination rights for both parties if the transaction is not completed by March 31, 2025.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the acquisition, highlighting its strategic benefits and expected financial contributions. The language used is optimistic and confident, suggesting a strong positive sentiment from the company.

Positives

• The acquisition is expected to increase SSR Mining's scale, free cash flow, and portfolio diversification.
• CC&V is expected to add approximately 170,000 ounces of annual gold production to SSR Mining's platform.
• The transaction is expected to be accretive to SSR Mining's key per-share metrics.
• The upfront consideration is less than 10% of SSR Mining's current market capitalization.
• CC&V is expected to provide meaningful operating and free cash flow generation.
• The mine has a long history of operation and a highly skilled team.
• CC&V has approximately 1.3 million ounces of gold Mineral Reserves, plus additional Measured & Indicated and Inferred Mineral Resources.

Negatives

• The transaction is subject to customary closing conditions, including regulatory approvals.
• The milestone payments are contingent on specific regulatory approvals and relief.
• SSR Mining will be responsible for a portion of the closure costs if they exceed $500 million.

Risks

• The transaction may not close if regulatory approvals are not obtained or if closing conditions are not met.
• There is a risk that the milestone payments may not be fully realized if the required approvals or relief are not obtained.
• The actual closure costs may exceed the estimated $500 million threshold, requiring additional funding from SSR Mining.
• There is a risk that the integration of CC&V into SSR Mining may not be as smooth or successful as anticipated.

Future Outlook

SSR Mining expects the acquisition to be accretive to key per-share metrics and to provide meaningful operating and free cash flow. The company plans to focus on delivering growth initiatives at its six key assets.

Management Comments

• Rod Antal, Executive Chairman of SSR Mining, stated that the acquisition represents a rare opportunity to add a high-quality producing asset in a Tier-1 jurisdiction at an accretive valuation.
• He also noted that the acquisition expands their U.S. based platform to an expected 300,000 400,000 ounces of average annual gold production, positioning SSR Mining as the third largest gold producer in the United States.
• Antal emphasized that the transaction structure helps ensure their balance sheet remains strong, with CC&V expected to immediately contribute meaningful cash flow.

Industry Context

This acquisition aligns with the trend of consolidation in the gold mining industry, as companies seek to increase scale, diversify their portfolios, and enhance free cash flow generation. SSR Mining's move to acquire CC&V positions it as a significant player in the U.S. gold market.

Comparison to Industry Standards

• The acquisition of CC&V is similar to other recent transactions in the gold mining sector, where companies are acquiring producing assets to boost production and cash flow.
• SSR Mining's strategy of acquiring and optimizing producing assets is similar to that of other mid-tier gold producers, such as Marigold, which has generated significant cash flow since its acquisition.
• The milestone-based payment structure is a common approach in mining acquisitions, allowing the buyer to mitigate risk and align payments with the achievement of specific operational or regulatory milestones.
• The reported AISC of $1,610 per ounce for CC&V is within the range of other similar open-pit gold mines, but the actual costs may vary after the acquisition.

Stakeholder Impact

• Shareholders of SSR Mining are expected to benefit from the increased scale, free cash flow, and portfolio diversification.
• Employees of CC&V are expected to become part of the SSR Mining team.
• Local communities near CC&V are expected to see continued economic activity and community engagement.
• Suppliers and other business partners of CC&V are expected to continue their relationships with the mine under SSR Mining's ownership.

Next Steps

• SSR Mining will work to satisfy pre-closing conditions and obtain required regulatory approvals.
• The transaction is expected to close in the first quarter of 2025.
• SSR Mining will provide 2025 guidance for CC&V following the closing of the transaction.
• SSR Mining will integrate CC&V into its existing operations and work to optimize its performance.

Key Dates

Keywords

SSR Mining, Newmont, Cripple Creek & Victor Gold Mine, acquisition, gold production, milestone payments, mining, mineral reserves, regulatory approvals, Carlton Tunnel, closure costs