SSR Mining Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. SSR Mining operates four producing mines in Türkiye, the United States, Canada and Argentina. Dollar amounts below are U.S. dollars.
Financial and operating highlights
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $301.0 million | $319.6 million | $615.6 million | $675.0 million |
| Operating income | $52.9 million | $70.1 million | $89.9 million | $186.0 million |
| Net income attributable to SSR shareholders | $74.9 million; $0.35 diluted EPS | $58.5 million; $0.27 diluted EPS | $104.7 million; $0.49 diluted EPS | $126.1 million; $0.57 diluted EPS |
| Adjusted attributable net income (non-GAAP) | $75.1 million; $0.35 diluted EPS | $66.8 million; $0.30 diluted EPS | $96.4 million; $0.45 diluted EPS | $132.7 million; $0.60 diluted EPS |
| Gold-equivalent production | 156,625 oz | 159,262 oz | 303,518 oz | 333,201 oz |
| Cost of sales per gold-equivalent ounce sold | $1,155 | $986 | $1,224 | $918 |
| AISC per gold-equivalent ounce sold (non-GAAP) | $1,633 | $1,267 | $1,663 | $1,177 |
Q2 operating cash flow was $80.3 million and free cash flow was $22.4 million, both as reported in the filing’s highlights. For the six months, operating cash flow was $83.3 million, capital spending was $117.2 million, and free cash flow was negative $33.9 million.
At June 30, cash and cash equivalents were $379.2 million, restricted cash was $33.6 million, and current assets totaled $1.155 billion against current liabilities of $203.7 million. Debt carrying value was $262.5 million, including $35.5 million current; the revolving credit facility had no borrowings and $199.1 million available. Total liabilities were $1.128 billion.
Changes versus prior comparable periods
- Q2 revenue declined 5.8%; six-month revenue declined 8.8%. Lower gold volumes sold were the main driver, partly offset by higher realized gold and silver prices.
- Q2 operating income fell 24.5%; six-month operating income fell 51.7%. Cost of sales rose 3.5% in Q2 and 16.2% year to date, reflecting higher operating costs and inflation.
- Q2 attributable net income increased 28.0%, while six-month attributable net income declined 17.0%. Q2 consolidated net income included a substantial income-tax benefit; the reported benefit was $83.4 million for the quarter and $80.6 million for the half-year.
- Gold-equivalent production decreased 1.7% in Q2 and 8.9% year to date. Marigold production grew, but Seabee production fell sharply on lower-grade ore; Seabee’s six-month gold production declined 64.6%. AISC per gold-equivalent ounce rose 28.9% in Q2 and 41.3% year to date.
- Cash and cash equivalents fell $276.2 million from year-end, principally reflecting investing and financing outflows. Six-month investing cash use increased substantially, including the Hod Maden payment and higher capital spending.
Outlook, developments and risks
- Management said existing capital resources were expected to fund business requirements for at least 12 months. The filing provides no specific production, cost or earnings guidance in the supplied text.
- SSR acquired an initial 10% interest and operational control of the Hod Maden project for $120 million, with options and contingent payments for additional interests. The highlights describe total acquisition consideration of up to $270 million; the detailed acquisition note separately describes $120 million of structured earn-in payments, $30 million of operational milestone payments, and up to $84 million tied to additional reserves. These descriptions should be reconciled.
- The Board declared a quarterly dividend of $0.07 per share. Q2 share repurchases totaled $40.1 million at an average $14.97 per share. A new issuer bid authorizes purchases of up to 10.2 million shares through June 19, 2024; it does not require the company to buy shares.
- Key exposures include volatile precious- and base-metal prices, inflation and operating costs, and foreign-exchange movements, particularly in the Turkish lira and Argentine peso. Q2 foreign-exchange loss was $21.2 million; the six-month loss was $34.4 million. Management also cited lower-grade ore at Seabee and cost pressures at operations.
- Türkiye enacted a corporate tax-rate increase from 20% to 25%, effective July 15, 2023 with retroactive application to January 1, 2023; its effects were to be recorded after quarter-end. A July 26 amendment replaced LIBOR-based Term Loan benchmarks with SOFR-based rates. The company reported covenant compliance and no material expected effect from ordinary-course legal proceedings.
Important facts for investors to verify
- Reconcile the Hod Maden acquisition’s maximum consideration and payment conditions across the highlights and detailed note.
- Assess the sustainability and cash-flow impact of the large tax benefit, foreign-exchange losses, and Türkiye’s retroactive tax-rate change.
- Review Seabee’s grade and production outlook, as well as company-wide cost and AISC increases.
- Compare Q2 free cash flow with the negative six-month figure and monitor capital spending, liquidity and the upcoming Term Loan repayment schedule.
- Consider that AISC, adjusted earnings and free cash flow are non-GAAP measures; the filing provides reconciliations and cautions against treating them as substitutes for GAAP results.