SSR Mining Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. SSR Mining operates four producing mines: Çöpler in Türkiye, Marigold in the United States, Seabee in Canada and Puna in Argentina. Financial figures below are in U.S. dollars unless noted.
Financial and operating performance
- Revenue: Q2 revenue was $319.6 million, down 15.2% year over year; first-half revenue was $675.0 million, down 9.2%.
- Profit: Q2 net income attributable to SSR Mining shareholders was $58.5 million, or $0.27 per diluted share, versus $74.7 million and $0.33 a year earlier. Adjusted attributable net income, a non-GAAP measure, was $66.8 million, or $0.30 per diluted share. First-half attributable net income was $126.1 million, down 31.3%.
- Operating income and margin: Q2 operating income was $70.1 million, down 32.4%; operating margin was approximately 21.9%, versus 27.5% in Q2 2021. First-half operating income was $186.0 million, down 20.2%.
- Production and costs: Q2 gold-equivalent production was 159,262 ounces, down 20.2%; first-half production was 333,201 ounces, down 15.8%. Q2 gold-equivalent ounces sold fell 17.0%. First-half production costs were $318.4 million, down 3.2%; cash cost and all-in sustaining cost (AISC) were $851 and $1,177 per gold-equivalent ounce sold, respectively, up 23.1% and 23.4% year over year. These per-ounce measures are non-GAAP.
- Cash flow: First-half operating cash flow was $95.0 million, compared with $263.3 million in 2021. Capital spending was $76.3 million and free cash flow, a non-GAAP measure, was $18.7 million, versus $170.0 million a year earlier.
- Liquidity and debt: June 30 cash and cash equivalents were $938.6 million, plus $35.4 million of restricted cash. Total current assets were $1.61 billion and current liabilities $226.4 million. Debt carrying amount was $331.9 million; the company had no borrowings on its $200 million revolving facility and reported $199.1 million of available capacity. It was in compliance with applicable financial covenants.
Material changes versus prior comparable periods
- Lower gold-equivalent sales and production drove much of the revenue and earnings decline. Gold production fell 20.6% in Q2 and 14.2% in the first half; realized gold prices increased 2.3% and 3.4%, respectively, but did not offset lower volumes.
- Çöpler production decreased amid lower sulfide grades and depleting oxide ore. Marigold output declined as planned mining moved through lower-tonnage ore zones. Seabee’s first-half gold production rose 49.7%, supported by higher mill-feed grade and productivity.
- Costs per ounce rose as sales volumes fell, while inflation and currency pressures contributed to higher costs at Puna. Consolidated first-half cash costs and AISC increased despite lower aggregate production costs.
- First-half operating cash flow declined substantially, in part due to lower gold sales at Çöpler and Marigold and a larger cash outflow from operating assets and liabilities.
Outlook, management commentary and notable items
- Çöpler operations were temporarily suspended at quarter-end by Türkiye’s Ministry of Environment pending required improvement initiatives. SSR said it had completed the initiatives and expected to pursue approvals to restart during Q3 2022 after regulatory inspection and verification. Care-and-maintenance expenses were expected until reopening; restart remained subject to approvals.
- Management stated current capital resources were expected to fund business requirements for at least 12 months. The filing does not provide a clear numerical production or cost forecast in the supplied text.
- The company declared a quarterly dividend of $0.07 per share and began a new normal-course issuer bid authorizing repurchases of up to 10.6 million shares through June 19, 2023. It repurchased 797,842 shares during the quarter for $14.7 million, at an average $18.38 per share.
- On April 14, SSR completed its acquisition of Taiga Gold for approximately $24.5 million, adding Saskatchewan exploration properties. After quarter-end, on July 6, it completed the Pitarrilla sale for $35 million cash, $35 million in Endeavour Silver shares and a 1.25% net smelter return royalty.
- Key exposures include volatile precious- and base-metal prices, inflation, foreign-exchange movements, weather, operating and supply challenges, and regulatory, environmental, political and community risks. Management reported no material change in market-risk disclosures and said routine legal proceedings were not expected to materially affect the company.
Important facts for investors to verify
- Whether Çöpler obtained regulatory approval and restarted on the expected timetable, and the duration and cost of any shutdown.
- Whether production at Çöpler and Marigold recovers as ore grades and mine plans change, and whether Seabee’s improved output is sustained.
- How gold and silver prices, inflation, fuel and reagent costs, and currency movements affect realized revenue and per-ounce costs.
- Whether operating cash flow and free cash flow improve, considering capital spending, working-capital movements, dividends and share repurchases.
- The realized value and accounting treatment of the Pitarrilla consideration, including Endeavour Silver shares and the royalty, and the exploration outcomes from Taiga Gold’s properties.