SSR Mining Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. SSR Mining operates four producing mines in Turkey, the United States, Canada and Argentina, producing gold and silver as well as lead and zinc concentrates. Results are unaudited and should be read with the company’s 2021 Form 10-K.
Key financial and operating results
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $355.4 million | $366.5 million |
| Operating income | $115.9 million | $129.2 million |
| Net income | $76.1 million | $127.5 million |
| Net income attributable to SSR Mining shareholders | $67.6 million; $0.32 basic and $0.31 diluted per share | $108.9 million; $0.50 basic and $0.48 diluted per share |
| Adjusted attributable net income (non-GAAP) | $65.9 million; $0.31 basic and $0.30 diluted per share | $110.7 million; $0.50 basic and $0.48 diluted per share |
| Cash from operating activities | $62.2 million | $127.5 million |
| Free cash flow (non-GAAP) | $27.7 million | $71.8 million |
| Gold-equivalent production | 173,675 ounces | 196,094 ounces |
| AISC per gold-equivalent ounce sold (non-GAAP) | $1,093 | $970 |
Production costs were $153.5 million, down 5.2%; depreciation, depletion and amortization was $58.7 million, up 9.2%. The effective income tax rate was 29.2%, versus a tax benefit and negative 5.2% effective rate in Q1 2021. AISC, adjusted earnings and free cash flow are non-GAAP measures and are not standardized.
Liquidity, debt and capital returns
- Cash and cash equivalents were $999.0 million at quarter-end, down from $1,017.6 million at December 31, 2021. Including restricted cash, cash and equivalents totaled $1,034.3 million.
- Debt carrying amount was $349.5 million, including $71.2 million classified as current. The company had no amount outstanding on its $200 million revolving credit facility and reported compliance with applicable debt covenants.
- Operating cash flow was below the prior year, while investing used $27.9 million and financing used $53.4 million. Cash capital expenditures were $34.5 million. The cash balance declined by $18.6 million.
- The Board declared a $0.07-per-share quarterly dividend, a 40% increase from the prior period; $15.0 million was declared and paid in April. No shares were repurchased during the quarter under the then-active repurchase plan.
Changes and management commentary
- Revenue declined 3.0%, mainly because gold-equivalent ounces sold fell 10.8%, partly offset by a 4.6% higher average realized gold price. Attributable net income fell 37.9%, and operating income fell 10.3%.
- Marigold production fell 50.3% amid lower-grade and lower-tonnage ore and slower leaching; gold sold declined 43.2%. Seabee production rose 121.5% with higher mill-feed grade and productivity. At Çöpler, production declined 10.0%, attributed mainly to depleting oxide ore. Puna silver production fell 27.3%, with adverse weather limiting access to higher-grade ore.
- Consolidated AISC per gold-equivalent ounce sold rose 12.7%. Management cited lower sales volumes and higher per-ounce costs; Argentina inflation and currency effects increased Puna costs. General and administrative expense more than doubled to $16.2 million, primarily because of mark-to-market stock-based compensation.
- The company said all sites remained operational during the quarter and that current capital resources were expected to fund business requirements for at least 12 months. It provided no specific full-year production, cost or financial guidance in the supplied filing text.
Transactions, risks and contingencies
- SSR Mining agreed to sell the Pitarrilla project for $35 million cash, $35 million in Endeavour Silver shares and a 1.25% net smelter return royalty; the transaction was expected to close in Q2 2022, subject to approvals and customary conditions. Pitarrilla assets of $63.7 million and liabilities of $6.9 million were classified as held for sale at quarter-end.
- After quarter-end, SSR Mining completed its acquisition of Taiga Gold on April 14, 2022 for approximately $24.5 million. The acquisition consolidates its interest in the Fisher property and adds five Saskatchewan properties.
- Key exposures include volatile precious- and base-metal prices, inflation and supply-chain or workforce disruptions, foreign exchange movements, and mine-specific operating and grade variability. Management warned that a sustained decline in commodity prices could adversely affect results and asset values.
- The company disclosed ordinary-course legal proceedings that management did not believe would materially affect its financial condition or results. Environmental surety bonds totaled $117.9 million. No material market-risk changes were reported; disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether Marigold’s leaching and ore-grade conditions improve, and how they affect production and unit costs.
- Whether Puna’s higher costs, weather constraints and inflation/currency pressures persist.
- Progress and final proceeds from the Pitarrilla sale, and the integration and exploration plans for Taiga Gold.
- Future production and AISC expectations, since the filing excerpt provides no specific full-year guidance.
- Cash generation, scheduled debt repayments, covenant compliance and the sustainability of dividends and other capital returns.