SSR MINING INC.(SSRM)Q4 2024 法說會逐字稿

Hello everyone, and welcome to SSR Mining's Fourth Quarter and Year End 2024 Conference Call. Please be advised that this call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

Thank you, operator and hello, everyone. Thank you for joining today's conference call to discuss SSR Mining's fourth quarter and full year financial results. Our consolidated financial statements have been presented in accordance with US GAAP. These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. There is an online webcast accompanying this call and you will find the information to access the webcast in this afternoon's news release and on our corporate website. Please note that all figures discussed during the call are in US dollars unless otherwise indicated. Today's discussion will include forward-looking statements, so please read the disclosures and the relevant documents. Additionally, we refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. 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.

Thanks, Alex. I want to start today's call by acknowledging that February 13th marked the one year anniversary of the tragic incident at Çöpler. An emotional memorial service was held at the site to reflect on the nine lost colleagues. This incident has left an indelible mark on all of us here at SSR, and I want to acknowledge the hard work and dedication demonstrated by everyone across this organization in 2024. We have made good progress at Çöpler, especially in recent months. Constructive discussions continue with the relevant Turkish authorities on a pathway to advance the restart of the operations. Bill will provide further update on the current activities of Çöpler later in the call. Now looking at our results for 2024, I'm pleased to report that we closed the year on a strong note with solid operating results, a year-over-year increase to our consolidated reserves and a major strategic announcement with the acquisition of Cripple Creek and Victor Mine from Newmont.

As a result, CC&V will increase at scale, free cash flow and portfolio diversification and we have made excellent progress on the integration planning since announcing the transaction in December. Our consolidated 2025 cost and production guidance including CC&V will be released shortly after the transaction closes in the coming weeks. Looking forward and as we progress our efforts at Çöpler, we have several important priorities and catalysts on the horizon in 2025. These include the delivery of a technical report and updated life of mine plan for CC&V, advancing Hod Maden towards a construction decision, continued progress on an updated and extended life of mine for Puna, including potential laybacks in Chinchillas and evaluation of the longer-term potential of Cortaderas, advancing the Buffalo Valley deposit at Marigold, which now hosts more than 500,000 ounces in its maiden reserve, ongoing exploration activities across the portfolio as we evaluate other opportunities for mine life extension at each one of the operations and most importantly continuing to advance Çöpler to a restart.

I also want to highlight two significant milestones achieved by SSR team in 2024 at Marigold, we celebrated 5 million ounces of life of mine gold production from the asset on December 30, a huge accomplishment and a testament to the quality of the mine and the team. Additionally, Puna produced 10.5 million ounces of silver in 2024 which was a record for the operation's 15 years life and hitting the top end of its previously increased production guidance. We are proud of our team in Argentina for their efforts in building Puna into one of the premier silver mines. Let's turn to Slide 4 for a discussion on the MR and MR update. Our consolidated reserves totaled 8 million gold equivalent ounces at the end of 2024, excluding any contributions from CC&V or Hod Maden. This was a 3% increase over 2023 after mine depletion, which is a strong result that showcases the success of our resource development drilling.

Notably, Marigold's reserves increased 14% year-over-year, driven by the declaration of a 523,000 ounce maiden reserve for Buffalo Valley, which will be a key life and mine extension opportunity for Marigold going forward. It is also worth noting that metal price changes were not a material driver in this reserve growth. All price assumptions at Çöpler and Seabee were unchanged from 2023, while Marigold and Puna increased their metal price assumptions by just 3% over the prior year. Our gold equivalent resources exclusive of reserves were down just 1% year-over-year despite the strong reserve conversion and unchanged metal price assumptions. Gold only M&I Resources increased 9% over 2023, driven in part by continued resource additions at Seabee. Further, the addition of both Hod Maden and CC&V will deliver meaningful reserve and resource growth in 2025 and we will continue advancing resource development activities across the portfolio as we strive to extend mine lives at each one of the producing assets.

This includes the progress at Marigold's New Millennium and Buffalo Valley deposits, Seabee's, Porky targets and at Puna, the Cortaderas project. Now I'm going to hand the call over to Michael to discuss the quarter on slide number five.

Thanks Rod and good afternoon, everyone. The fourth quarter of 2024 was our strongest of the year with 124,000 gold equivalent ounces produced at all-in sustaining cost of $18.57 per ounce. For the full year, we produced 399,000 gold equivalent ounces at AISC of $18.78 per ounce. Production of Marigold, Seabee, and Puna combined produced 371,000 gold equivalent ounces in 2024 at an AISC of $15.42 per ounce. As a reminder, under US GAAP we do not adjust for care and maintenance costs incurred during the year and the cash impact of these expenses are reflected in our AISC numbers. Excluding the approximately $178 per ounce of cash care and maintenance costs incurred at Çöpler and Seabee in Q4, AISC for the quarter was $1,679 per ounce. For the full year excluding care and maintenance costs, AISC was $16.99 per ounce. At Çöpler, full year reclamation and remediation spend was $128 million. We also spent approximately $14 million advancing Hod Maden in the fourth quarter, bringing full year spend at the project to $42 million as we progress engineering and preliminary site development activities.

Lastly, as Rod mentioned, we had a good year at the drill bit in 2024 and look forward to continued advancement of these Brownfield opportunities in 2025. Moving to our financial results on Slide 6. We recorded attributable net income of $0.03 per diluted share in the fourth quarter and adjusted net income of $0.10 per diluted share. Care and maintenance costs at Çöpler and Seabee which totaled $36 million in the fourth quarter account for $0.18 per diluted share. Fourth-quarter operating cash flow was $95 million and free cash flow was $56 million, a very strong result to close out 2024. We finished the year with $388 million in total cash, a net cash position of $158 million and total liquidity of approximately $890 million. With this existing liquidity and an outlook for continued free cash flow generation in 2025, we have closed the year in a strong position financially and we are well positioned to manage remediation costs at Çöpler, as well as our reinvestment needs across the business.

Furthermore, we expect CC&V will contribute immediate free cash flow to our business upon integration, enabling a rapid payback of the transaction's $100 million upfront consideration, particularly at these gold prices. Now over to Bill for Slide 8.

Thanks Michael. I'll start with a brief update on Çöpler. In the fourth quarter of 2024, we continued to advance reclamation and remediation activities at site and we have now removed all of the displaced heap leach material from the Sabirli Valley. We are continuing discussions with Turkish government officials around the final remediation plan at Çöpler. Positively, we continue to note public commentary from Turkish officials affirming that there was no recordable contamination to local soil, water, or air in the location sampled. Following the incident, we commissioned Call & Nicholas Inc, or CNI, an international mining consultant firm to conduct an independent review of the Çöpler heap leach failure. This was an important body of work for us as we sought to determine the cause of the Çöpler incident. CNI determined the most likely cause of the Çöpler incident was a deep-rooted flaw in the third-party engineering design of the heap leach pad, namely an overestimation of the shear strength properties of the liner system at the base of the heap leach.

This error inflated the calculated factor of safety and resulted in insufficient shear strength along the liner interface to support the designed heap leach facility. CNI also determined that in all material aspects the heap leach pad construction and operation was carried out in conformance with the issued for construction engineered design parameters that there was no substantiation that excess water, ground vibrations from blasting or stacking beyond the design caused the event. These outcomes provide clarity and understanding for our team on the ground as we seek to restart the Çöpler mine and we continue to work closely with relevant authorities on this front. As a reminder, we expect Çöpler could be restarted within 20 days from the receipt of the necessary permits with initial operations consisting of processing a combination of stockpiled ore and ore mined from Çakmaktepe, while the remediation work continues.

Now let's move on to Slide 8 for some commentary on Marigold. Marigold produced 60,000 ounces in the fourth quarter, its strongest period of the year and marking 5 million ounces of total production over the mine's 35-year operating life. This is a significant milestone for any gold mine and is a clear testament to the quality of the people we have on the ground in Nevada. For the full year, Marigold produced 160,000 ounces at an AISC of $1,711 per ounce with costs reflecting increased royalty expenses. Given the current gold price and also continued cost pressures of parts OEM components, we expect these costs to remain elevated in 2025. As Rod noted in the MR/MR update, we made some great progress with brownfield exploration and studies at Buffalo Valley, enabling the declaration of a 523,000 ounce maiden mineral reserve at the deposit. We also delivered mineral resource growth at New Millennium and will continue to advance brownfield drilling activity at Marigold in 2025 to build on these positive outcomes.

Now on to Seabee on Slide 9. Operations restarted at Seabee on October 11 and the mine closed the year with its strongest quarter of 2024 with production at 28,000 ounces at an AISC of $1,214 per ounce. This strong production was driven by higher than expected head growth which averaged 9.7 grams per tonne in the quarter. Thanks to the strong fourth quarter, Seabee finished the year above its previously revised production guidance with 79,000 ounces at an AISC of $1,515 per ounce. The team continued evaluating the drilling at the Porky and Porky West targets in 2024 which helped deliver an 88% increase in measured and indicated mineral resources for Seabee. We're advancing further drilling and technical studies to better delineate the opportunity to potentially extend the operating life at Seabee through both additional mineralisation at Santoy and a potential new development pathway at the Porky targets.

Now on to Puna. Puna produced 3 million ounces of silver in the fourth quarter, driving record full year production of 10.5 million ounces of silver. This production meant the top end of Puna's previously increased guidance, bringing a strong close to a truly exceptional year for the operation. Full year AISC at Puna was $15.56 per ounce, delivering significant free cash flow margins in the current silver price environment. We made good progress evaluating life extension opportunities at Puna in 2024, including at both Chinchillas pit and Cortaderas Target. We expect to be in a position to provide further updates on these initiatives within 2025 and are excited to build on Puna's recent success by delivering a longer mine life and continued economic benefits for our local stakeholders. Before I turn back to Rod, I would quickly speak to the Cripple Creek and Victor acquisition. I’ve personally overseen the integration process since we announced the transaction in December and I'm confident we are positioned to realise significant value from CC&V right out of the gate.

Our due diligence identified meaningful opportunities to build on the sizeable mineral reserves and resources that already exist at the asset. And we look forward to demonstrating other opportunities to deliver additional value from the asset in an updated life of mine plan for CC&V within 2025. I'm thrilled to bring an asset and team of this caliber into our portfolio and look forward to discussing our long-term plans for the mine in the near future. I'll turn back to Rod for closing remarks.

Well, thank you Bill. And thanks Michael. When I closed this call at the end of the third quarter, I noted that we were looking forward to a strong close in 2024. I'm happy to say that we delivered on those expectations and we look forward to continuing this positive momentum by delivering a number of catalysts in 2025. With the CC&V transaction closing in the coming weeks, we have added another long-lived and free cash flow generative asset to our portfolio and we look forward to sharing our consolidated production and cost outlook for the company before the end of the quarter. But at the same time, we continue to diligently advance towards a potential restart of operations at Çöpler. Çöpler is a meaningful contributor to the local and national economies in Turkey and we are keen to return to operations while we continue the remediation and reclamation efforts in 2025 and beyond. I'm proud of the tremendous resilience of our teams and the business. What the business demonstrated in 2024. We have entered a new year with renewed optimism and while we have a busy year ahead, we look forward to surfacing value across all of our assets in 2025. So with that, I'm going to turn the call over to the operator for questions. Thank you.

Thank you, Mr. Antal. We will now begin the question-and-answer session. Your first question today will come from Ovais Habib with Scotiabank. Please go ahead.

Thanks operator. Hi Rod and SSR team. Just a couple of questions for me. Just starting off with Seabee. Obviously had a great quarter in Q4. Should we expect any sort of outperformance like this to continue into 2025?

Hey. I'm going to let Bill take that one.

Yes, thanks for the question. It was a great quarter. We obviously hit some very special grades. We continue to search and do further exploration in Santoy. Cannot expect those grades to continue each and every other quarter. But we do expect to continue along that same vein year in, year out. But as you know, if you've been tracking Seabee, there are times where we hit some of that better grade and this quarter was definitely one of them.

Thank you for that, Bill. Now moving on to Çöpler, Rod, can you share if there is any specific information or study that regulators are waiting for before deciding to restart operations, or have the recent findings from CNI been sufficient for them to proceed?

Yes, look, I think the simple way to think about it, it's a package of work. If you think about in the year that we've had since the incident, we've made tremendous progress as we've been continually reporting all through 2024 and obviously now with our full year financials and the priorities that we set ourselves and the aggressive timetable that we set ourselves to achieve what we've actually done in terms of control the site, ensure we didn't have any environmental contamination to remediate and clear the Sabirli Valley to make the site safe are all sort of precursors to a restart as you would expect. Similarly, the CNI report itself obviously isn't a precursor, but it's important to understand as we're talking and working with the regulators. And the last few pieces are really around locking down and agreeing on what the closure plans will be and that is in respect to the storage facility that Bill mentioned.

So that's concluding now, as well as the final heap leach closure itself. So it's all been a package if you like, as a progression to where we are today to get us into this place as we're looking forward to a restart, we've still got work to do as similarly as we always will. Remediation efforts will continue beyond even when Çöpler restarts, as we've talked about before, et cetera, et cetera. So restart doesn't necessarily mean there's not more work to be done. But I think as I think back to where we were this time last year where clearly we're all shocked about what happened and to where we are now. We've come a long way, and obviously we're working confidently with the regulators to seek a permission and permits to get restarted at Çöpler.

Thanks for that color, Rod. And just kind of number three on my end, again, in terms of moving on to Hod Maden. Does the commencement of the development of Hod Maden hinge anyway on the restart of operations at Çöpler?

Yes, the way to think about it is that when we acquired our interest in Hod Maden, we decided to take the time to develop a comprehensive plan. This plan includes a technical study outlining our approach to developing the asset, focusing on the execution details and necessary technical information, especially for the first few years after starting the asset, as that is crucial for understanding the expected payback. This work has been progressing behind the scenes, separate from Çöpler, and will continue this year until we can finalize the technical reports and begin external project financing discussions with banks to move Hod Maden into construction. Therefore, the development of Hod Maden is not dependent on the Çöpler operations, and the separation of our teams and efforts has facilitated this exclusivity. Great. Thanks, Ovais. Appreciate it.

And your next question today will come from Cosmos Chiu with CIBC. Please go ahead.

Hi, thanks Rod and team. Maybe my first question is on Marigold. Good to see that you have declared an initial reserve at Buffalo Valley. Could you remind me in terms of how that slots into the production profile of Marigold?

Yes, look, I'll let Bill answer the question, but I think what's important was, for most people to take away from the year, there could have been a period where we may have forgotten about the rest of the business, but the fact that we're able to achieve what we achieved with the challenge of Çöpler in respect to the operations performing as well as continuing to evolve and daylight the growth from the portfolio. I'm really proud of the team and what they've been able to do. And I want to make that declaration very public because we sort of forget, right. We just take it as granted. But the efforts in the background to bring a Buffalo Valley now into a reserve shouldn't go unnoticed because it is important for the future of Marigold. And again, another really good indication of the focus that we've had and the energy that we've got in the business. But Bill, why don't you answer the question around the timing.

So Cosmos, we're very excited about it. It's like a satellite of that main area. There was a lot of good work done already working it through this year. We're taking that further in the feasibility study type work with a lot of engineering. And we'll be updating our life of mine plans as typically throughout this year. So in terms of the timing, it'll be driven by two things. The net value, which we believe is going to be high for Buffalo Valley, but we've also got to still go through the permitting processes. So it's still several years off, but it's definitely something that we're excited about progressing through the pipeline and we'll be able to give more color to that later in the year after we've worked through our life of mine scheduling processes.

Great, and thanks, Bill. Echoing your comments, Rod, I was pleasantly surprised to see progress at some of these different assets, including Buffalo Valley. I agree with what you said, Rod.

Yes, I appreciate it. I think another area of focus for us in 2025, beyond what Bill described for Buffalo Valley, which is important, will be people drilling into the New Millennium target, which has progressed but is not as advanced as Buffalo Valley.

Yes. Great. And then, as you mentioned, you put out your updated mineral reserve – mineral resource estimate today as well for the year. And as you mentioned, you used very conservative commodity price assumptions. 1,500 for some of the assets, even lower for the other ones. Could you maybe talk about the decision to use these conservative commodity price assumptions and what would have happened. Some of them, like Marigold, for example. I would imagine there's some assets that could come in into the pit if you were to have used a higher commodity price assumption. So two parts. Why did you continue to use a commodity price much lower than spot prices today? And what could have happened?

I’m not going to speculate on the potential outcomes because each situation is sensitive in its own way. The primary reason for our current position regarding Çöpler is that the asset is under care and maintenance, so we maintained the metal prices as they were. It made more sense to leave them unchanged until we initiate a restart. This decision was crucial. As for Seabee, it's already at $1,650 due to its relatively short mine life, so we had no reason to alter that. Other assets saw slight increases, but that was part of the decision-making process during our assumptions. We also consider consensus and look at what our peers are doing, which informed our reserve and resource statements. We conduct a strategic mine plan review annually to avoid complexity, with the next review scheduled for 2025. Additionally, with the acquisition of CC&V, we need to be mindful that Newmont has historically been conservative in its resource and reserve estimates. We will see how they adjust their statements shortly, and that will factor into our comprehensive portfolio review in 2025. Updates may occur as we move through this year, particularly regarding how commodity prices influence the optimal pit designs. Their sensitivity differs, so while I won’t elaborate on each one, a sustained high commodity price will certainly benefit them. Further details will emerge later this year.

Of course. I have one last question about Çöpler. You mentioned that the overall remediation and containment costs are estimated at $250 million to $300 million, and that you’ve spent $127 million so far. Can you clarify the timing for the rest of that spending?

Yes, I will let Michael take that call. Over to you, Michael.

Thanks, Cosmos. I think as you look at what Rod mentioned earlier in this call, a lot of the focus in 2024 was the Sabirli valley and that work has been completed. As we work for the engineering and the timeline for the east storage facility, the material movement will be subdued throughout 2025. Once that facility is constructed, then the material movement will pick back up. So I would expect that remediation and reclamation spend to be lower than it was in 2024. And as we get that permitting and other things done for the east storage facility, we'll ramp up that material movement again.

We will provide guidance as best as we can. It's essential to accurately state the numbers concerning the liability we are carrying, as it's crucial for understanding. Our estimate of $250 million to $300 million remains unchanged and is solid. We have already addressed a significant portion of that with our efforts in 2024. The remainder of the spending will occur over several years after 2025 as we continue to develop the east storage facility and address the remediation efforts on the pad. Therefore, if you consider our liquidity position, we are in an exceptionally strong position.

Great. Thanks Rod, Michael, and Bill. Those are the questions I have. Thank you.

Thanks, Cos.

And your next question today will come from Lawson Winder with Bank of America Securities. Please go ahead.

Yes, thank you very much, operator. Good morning or good evening Rod and team. I wanted to ask about Marigold in advance of your guidance. I mean I'm not going to ask you for a preview of the guidance which conceptually Marigold a year ago was conceived to be going through a period of investment. So 2025 would have as a result experienced lower gold production and then a rebound in 2026 and then still higher in 2027. Just generally, is that still the concept or could there be a push out of the investment that was considered a year ago?

Sorry Lawson, I had you on mute. I think if you use the tech report we put out this time last year as the placeholder for guidance, I think that's still sound. So until we do it, I think that's the best reference point.

Okay, fantastic. And then to what extent can you provide us some additional color in terms of what Turkey is considering as conditions for reinstatement of the operating approvals for Çöpler? So, for example, is there any consideration to some increase in local ownership of part of the mine? Is there a consideration for a resubmission of a completely new EIA? Or what are some kind of the moving parts or do you have some stage gates that you can share with us in order just to help us kind of think about potential timelines? Anything you could share would be very helpful.

Yeah, look, I think sort of, I'll repeat what I sort of said a moment ago, but if you think about the incident itself, it was unprecedented, right? So yes, there is no playbook to this in terms of what needs to be done for a restart. However, the efforts that we made and have made in themselves is entirely in alignment to seeking a restart. So we've made terrific progress on those fronts and we continue to make progress on those fronts. We believe we're getting to the pointy end of that work which necessitates the completion of the engineering for the storage facility and the engineering around the heap leach pad remediation, which we're closing in fast to complete. And obviously those discussions are going on in parallel with the regulators to ensure that we're doing all the things that we need to do before we seek approval for the reinstatement of the temporary operating certificate. So there's no condition precedent; there's no determinant around, you have to do a new EIA.

We will be operating under the 2014 EIA. And as I mentioned, I think probably on the last call, no matter what, we actually had to do a new EIA for Çöpler anyway, which we fully expect to complete this year for submittal or what we'll call the Çöpler 2025 EIA, that will take into account the anticipated grind leach circuit and some of the expansion opportunities that we identified in the last tech report this time last year. And that sort of normal course, it's obviously more important now because we want to get the higher throughput rates back up at Çöpler. But nonetheless it was sort of more in the ordinary course for us than having to be done because of anything the regulatory want. So I think, again, as we're moving forward, we're doing all the things we need to do, and we've got to just continue to deliver those and continue with that dialogue with the regulators.

Okay, thank you. Look forward to further updates on that. Appreciate it.

Good stuff. Thank you, Lawson.

This concludes the question-and-answer session, as well as today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.