SSR Mining Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless noted. SSR Mining operates four producing assets: Çöpler (Türkiye), Marigold (U.S.), Seabee (Canada) and Puna (Argentina).
Financial and operating results
- Revenue: $314.6 million, down 11.5% from $355.4 million. Lower gold sales volumes drove the decline, partly offset by more silver sales and a slightly higher realized gold price.
- Profit: Operating income was $37.0 million, down 68.1%; operating margin was approximately 11.8%, versus 32.6%. Net income attributable to SSR Mining shareholders was $29.8 million, or $0.14 per diluted share, compared with $67.6 million, or $0.31 diluted. Adjusted attributable net income, a non-GAAP measure, was $21.3 million, or $0.10 per diluted share, versus $65.9 million, or $0.30.
- Production and costs: Gold-equivalent production was 146,894 ounces, down 15.4%; gold-equivalent sales were 154,557 ounces, down 14.0%. Cost of sales was $1,289 per gold-equivalent ounce sold, up 50.9%; AISC was $1,693, up 54.9% (non-GAAP).
- Cash flow: Operating cash flow was $3.0 million, versus $62.2 million. Capital expenditures were $59.2 million, resulting in negative free cash flow of $56.3 million, versus positive $27.7 million (non-GAAP).
- Liquidity and debt: Cash and cash equivalents were $561.8 million at March 31, down from $655.5 million at year-end; an additional $34.0 million was restricted cash. Total debt carrying amount was $280.1 million, including $53.4 million current. The $200 million revolving credit facility had no borrowings and $196.6 million available after letters of credit. Management said resources were sufficient for business needs for at least 12 months.
- Capital returns: The company paid $14.4 million in dividends and repurchased $5.2 million of shares during the quarter. It reported cumulative NCIB repurchases of 6.4 million shares for approximately $105.2 million through March 31, 2023.
Material changes and management commentary
- Results varied significantly by operation. Seabee gold production fell 70.0%, with lower grades and recovery; its AISC rose to $2,207 per ounce from $596. Marigold production rose 53.8%, while its AISC increased to $1,663 from $1,564, partly reflecting earlier-than-planned haul-truck purchases. Çöpler production declined 22.0% and AISC rose to $1,420 from $955. Puna silver production rose 54.6%; silver AISC increased to $16.40 per ounce from $14.67.
- Cost of sales rose 29.8% to $199.3 million, reflecting higher operating costs and inflationary pressures. Exploration, evaluation and reclamation expense increased $2.8 million as the company committed to additional exploration and resource conversion work.
- Cash used in investing activities was $51.9 million, mainly reflecting higher capital spending, including Marigold haul trucks and leach-facility improvements and the Çöpler tailings-storage expansion. Working-capital changes reduced operating cash flow by $87.9 million.
- The company reported a $13.2 million foreign-exchange loss, primarily related to weakening of the Argentine peso and Turkish lira. Other income included higher interest income and gains on marketable securities. The effective tax rate was 8.8%, compared with 29.2%; results included release of $6.6 million of uncertain tax positions and tax adjustments related in part to Türkiye’s earthquake tax.
Outlook, risks and contingencies
The filing provides no specific production, revenue, earnings or cost guidance. Management stated that available capital resources should meet business requirements for at least 12 months. It highlighted metal-price volatility, foreign-exchange exposure and possible impairment sensitivity of mineral properties, inventories, deferred tax assets and goodwill. The Term Loan’s final repayment is scheduled for Q4 2023; the company reported covenant compliance. Outstanding environmental surety bonds totaled $117.4 million. Management said normal-course legal proceedings were not expected to have a material effect. The company also recorded a $2.0 million Çöpler leach-pad inventory write-down.
Investor facts to verify
- Whether Seabee’s lower grades and recovery, and the associated cost increases, persist or improve.
- Whether operating cash flow recovers from the quarter’s low level and substantial working-capital outflow, and how planned capital spending affects free cash flow.
- Progress and funding for the Term Loan repayment due in Q4 2023, and continued availability of the revolving facility.
- Final outcomes of Türkiye-related tax assessments and uncertain tax positions, and the effect of currency movements on reported results.
- Definitions and reconciliations of AISC, adjusted attributable net income and free cash flow, which are non-GAAP measures.