SSR Mining Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Amounts are in U.S. dollars unless stated otherwise. SSR Mining operates four producing mines in Türkiye, the United States, Canada and Argentina.
Financial and operating results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $166.6 million | $322.8 million | $841.7 million | $1,066.3 million |
| Operating income (loss) | $(35.1) million | $92.7 million | $150.9 million | $325.6 million |
| Net income (loss) attributable to SSR shareholders | $(25.8) million | $57.1 million | $100.3 million | $240.6 million |
| Basic earnings (loss) per share | $(0.12) | $0.27 | $0.48 | $1.11 |
| Gold-equivalent production | 106,919 oz | 186,941 oz | 441,164 oz | 583,316 oz |
| Production cost per gold-equivalent ounce sold | $1,099 | $876 | $955 | $834 |
| AISC per gold-equivalent ounce sold | $1,901 | $948 | $1,331 | $952 |
Q3 operating loss was approximately 21% of revenue. Q3 adjusted attributable net loss, a non-GAAP measure, was $13.5 million, or $0.07 per diluted share; nine-month adjusted attributable net income was $119.2 million, or $0.55 per diluted share.
Nine-month operating cash flow was $42.8 million, down from $424.4 million. Capital expenditures were $116.2 million, producing negative free cash flow of $73.4 million (non-GAAP). Cash and cash equivalents were $748.5 million at September 30, down from $1,017.6 million at year-end 2021; cash, cash equivalents and restricted cash totaled $784.0 million.
Current assets were $1.431 billion and current liabilities were $247.1 million. Debt carrying value was $315.5 million, comprising $89.3 million current and $226.3 million non-current on the balance sheet; finance lease liabilities totaled $107.3 million. The company had $199.1 million available under its revolving credit facility, with no borrowings outstanding.
Material changes and drivers
- Q3 revenue fell 48.4% year over year, primarily because gold ounces sold decreased 53.9% and realized gold prices fell 4.6%. The Çöpler mine contributed only $4.2 million of revenue versus $145.2 million a year earlier.
- Çöpler operations were temporarily suspended following a June 21 leach-solution leak. After completing required improvement measures and receiving regulatory approvals on September 22, the mine restarted. The suspension reduced production and resulted in $41.8 million of care-and-maintenance expense during the quarter.
- For the first nine months, gold-equivalent production declined 24.4%; revenue declined 21.1%, operating income declined 53.6%, and attributable net income declined 58.3%. Marigold output was lower amid slower leaching and fewer tonnes stacked; Seabee output increased, while Puna faced higher costs.
- Cost inflation affected operations, particularly fuel and reagents at Marigold and fuel, electricity and reagents at Puna. Consolidated nine-month production cost per gold-equivalent ounce sold increased 14.5%, while AISC rose 39.8%.
- The company repurchased and cancelled 6.1 million shares for $100.0 million year to date and paid $44.4 million in dividends. The board declared a $0.07-per-share quarterly dividend payable December 19, 2022.
Outlook, risks and unusual items
- Management stated that current capital resources are expected to be sufficient for business requirements for at least 12 months. The filing provides no specific production, earnings or cost guidance.
- Term Loan covenant issue: The Çöpler suspension caused non-compliance with certain Term Loan financial covenants at September 30. The company was seeking a lender waiver; absent a waiver, lenders could accelerate repayment of the outstanding balance. The full Term Loan was classified as current, and the company stated it could use available cash to repay it.
- Subsequent to quarter-end, SSR agreed to acquire an additional 30% of the Kartaltepe Mining Joint Venture for $150 million cash, expected to close in Q4 2022. SSR stated that it would then own 80% of the Çöpler District.
- The Pitarrilla project sale closed July 6. Consideration included $35 million cash, Endeavour Silver shares stated at $35 million in the transaction terms but valued at $25.6 million on the closing date, and a 1.25% net smelter return royalty; a $0.6 million gain was recorded.
- Other reported exposures include volatile precious- and base-metal prices, foreign exchange losses (including exposure to Argentine and Turkish currencies), and a $9.2 million unrecognized tax benefit that management considered reasonably possible to settle within 12 months. The filing says routine legal proceedings are not expected to materially affect financial condition or results.
Important facts for investors to verify
- Whether lenders granted a waiver for the Term Loan covenant non-compliance, and the resulting repayment classification and liquidity implications.
- Çöpler’s sustained operating performance after its September restart, including regulatory and environmental follow-up to the leach-solution leak.
- Completion, funding and expected benefits of the $150 million Kartaltepe interest acquisition.
- Drivers of sharply lower operating cash flow and negative free cash flow, and whether working-capital movements and capital spending normalize.
- Reconciliation of non-GAAP adjusted earnings, cash costs, AISC and free cash flow to GAAP measures; these measures are not standardized.