SSR Mining Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. SSR Mining operates four producing mines in Türkiye, the United States, Canada and Argentina. Comparisons below are with the corresponding 2022 periods unless noted.
Financial and operating results
| Metric | Q3 2023 | First nine months 2023 |
|---|---|---|
| Revenue | $385.4 million | $1,001.0 million |
| Operating income | $77.5 million | $167.4 million |
| Net income (loss) attributable to SSR Mining shareholders | $15.2 million; $0.07 diluted EPS | $119.8 million; $0.57 diluted EPS |
| Adjusted attributable net income (non-GAAP) | $53.0 million; $0.26 diluted EPS | $149.4 million; $0.70 diluted EPS |
| Gold-equivalent production | 192,195 oz | 495,668 oz |
| Cost of sales per gold-equivalent ounce sold | $1,095 | $1,173 |
| AISC per gold-equivalent ounce sold (non-GAAP) | $1,289 | $1,516 |
Q3 revenue rose 131.3% to $385.4 million, chiefly reflecting higher gold sales and the return of Çöpler operations after the 2022 temporary suspension, as well as higher realized metal prices. Operating margin was approximately 20.1% (operating income divided by revenue). Consolidated GAAP net loss was $7.2 million in Q3, despite positive income attributable to SSR Mining shareholders, in part because of the allocation to non-controlling interests and a $68.9 million tax expense.
For the first nine months, revenue increased 18.9%, operating income increased 10.9%, and attributable net income increased 19.5%. Gold-equivalent production increased 12.4%. AISC rose 13.9% year over year, while Q3 AISC decreased from the prior-year quarter, which included Çöpler care-and-maintenance costs. The nine-month results included a sharp decline at Seabee: gold production fell 53.3%, mainly due to lower mill-feed grade.
Cash flow, balance sheet and capital allocation
- Cash provided by operating activities was $218.6 million for the first nine months, versus $42.8 million in 2022. Cash used in investing was $280.2 million and cash used in financing was $157.8 million. Nine-month free cash flow, a non-GAAP measure, was $53.9 million versus negative $48.5 million in 2022.
- The highlights report Q3 operating cash flow of $135.3 million and free cash flow of $87.8 million. The supplied filing text does not include a quarterly cash-flow statement or a quarterly free-cash-flow reconciliation to verify those figures.
- Cash and cash equivalents were $437.7 million at September 30, down from $655.5 million at December 31, 2022. Current assets were $1.16 billion and current liabilities were $166.1 million.
- The Term Loan was fully repaid in September with a $35.8 million payment; $33.4 million of restricted cash was released. Remaining debt was principally $227.3 million carrying value of 2.50% convertible notes due 2039. The $400 million revolving facility, with a further $100 million accordion, had no borrowings; $399.1 million was available after letters of credit. It matures August 15, 2027, and the company reported covenant compliance.
- For the first nine months, shareholder returns totaled $88.5 million: $43.2 million of dividends and $45.3 million of repurchases, covering 3.0 million shares. No shares were repurchased in Q3. The board declared a $0.07-per-share quarterly dividend payable December 11, 2023.
Material changes, outlook and risks
- In May, the company acquired a 10% interest in the Hod Maden project in Türkiye for $120 million and consolidated the project entity as a variable-interest entity. It may acquire an additional 30% for $120 million in milestone-linked payments; other contingent payments include up to $30 million for milestones and $84 million tied to additional reserve delineation.
- Türkiye’s corporate tax rate increase from 20% to 25%, retroactive to January 1, 2023, resulted in approximately $68.9 million of deferred tax expense in Q3. Adjusted earnings exclude $37.2 million for the rate change. A Turkish tax-amnesty settlement also resulted in a $7.2 million release of tax, interest and penalties during the nine months.
- Q3 foreign-exchange loss was $23.0 million, and the nine-month loss was $57.4 million, primarily associated with weakening of the Argentine peso and Turkish lira. Çöpler recorded $7.2 million of leach-pad inventory write-downs in Q3; the nine-month total was $9.2 million.
- Management said existing capital resources were expected to meet business requirements for at least 12 months and that working capital and future operating cash flows were expected to fund planned activities and commitments. The filing provides no specific production or cost guidance in the supplied text; management cited further exploration to support growth and resource conversion.
- Key exposures include volatile metal prices, foreign-exchange movements, inflation and operating performance. Management noted that lower commodity-price expectations could trigger impairment of mineral properties, inventories, deferred tax assets or goodwill. Surety bonds for environmental obligations totaled $120.6 million. Management did not expect normal-course legal proceedings to materially affect financial condition or results.
Important facts for investors to verify
- Reconcile the highlighted Q3 operating cash flow and free cash flow figures with quarterly cash-flow disclosures; the statement and reconciliation presented here cover nine months.
- Assess the sustainability of production and costs, particularly Seabee’s lower grades and Çöpler’s inventory write-downs and higher nine-month unit costs.
- Review the sensitivity of reported GAAP earnings and asset values to Turkish tax and currency effects, Argentine currency exposure, and metal prices.
- Evaluate the funding, milestone conditions and contingent consideration for Hod Maden, alongside planned capital spending and the revolving facility’s covenant terms.
- Compare non-GAAP adjusted earnings, AISC and free cash flow with their GAAP reconciliations and consider the effects of exclusions and period-to-period operating changes.