8-K: SSR Mining Reports Second Quarter 2024 Results Amidst Pler Incident Recovery

SSR Mining announced its second quarter 2024 financial results, highlighting ongoing recovery efforts at the pler mine following a tragic incident, while maintaining production guidance for other key assets.

Summary

• SSR Mining released its second quarter 2024 financial results, reporting a net income of $9.7 million, or $0.05 per diluted share.
• The company's adjusted net income was $7.5 million, or $0.04 per diluted share.
• Operating cash flow was negative $78.1 million, or negative $23.1 million before working capital adjustments, and free cash flow was negative $116.3 million, or negative $61.3 million before working capital adjustments.
• The company had a cash balance of $358.3 million and total liquidity of $858.4 million as of June 30, 2024.
• Second quarter production was 76,102 gold equivalent ounces at a cost of sales of $1,357 per payable ounce and AISC of $2,116 per payable ounce.
• The pler mine remains suspended following the February 13, 2024 incident, with remediation costs estimated between $250 to $300 million.
• Over 13 million tonnes of displaced heap leach material have been moved at pler, with the remaining material expected to be removed by the end of the third quarter of 2024.
• SSR Mining's full-year 2024 production guidance for Marigold, Seabee, and Puna remains unchanged at 340,000 to 380,000 gold equivalent ounces.
• The company completed the sale of the San Luis project for $5 million in cash and potential contingent payments of up to $37.5 million, plus a 4.0% net smelter return royalty.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the significant impact of the pler incident on the company's financial results and operations. While the company is managing the situation and maintaining guidance for other assets, the uncertainty surrounding the pler mine and the high remediation costs weigh heavily on the outlook.

Positives

• SSR Mining maintains a strong balance sheet with $358 million in cash and over $850 million in total liquidity.
• The company is on track to meet its full-year production guidance for Marigold, Seabee, and Puna.
• Puna achieved a record quarterly process plant throughput.
• The sale of the non-core San Luis project was completed, bringing in $5 million in cash and potential future payments.
• All nine individuals lost in the pler incident have been recovered.
• Containment infrastructure at pler is successfully in place, with no recordable contamination to local soil, water, or air.

Negatives

• The pler mine remains suspended following the February 13, 2024 incident.
• Operating cash flow was negative $78.1 million for the quarter.
• Free cash flow was negative $116.3 million for the quarter.
• The company incurred $55 million in remediation costs at pler during the second quarter.
• Second quarter production was significantly impacted by the pler suspension, with only 76,102 gold equivalent ounces produced.
• AISC per gold equivalent ounce was $2,116, which is higher than the previous year.

Risks

• The ongoing suspension of operations at the pler mine poses a significant risk to the company's production and financial performance.
• The estimated remediation costs at pler, between $250 to $300 million, could impact the company's financial resources.
• The investigations into the cause of the pler incident are ongoing, and the outcome could have further implications.
• The company is still working to secure the required permits for the East Storage Facility and the restart of the pler mine, which could face delays.
• The company is not able to estimate when and under what conditions operations will resume at pler.
• The company's financial results are subject to fluctuations in commodity prices.

Future Outlook

SSR Mining maintains its full-year 2024 production guidance for Marigold, Seabee, and Puna, expecting a stronger second half of the year, particularly in the fourth quarter for Marigold. The company is working towards securing permits for the pler mine restart but cannot estimate the timing.

Management Comments

• The primary focus following the pler Incident was the recovery and return of our missing colleagues to their families.
• We continue to provide support to the families, our colleagues and the community members impacted by the tragic events of February 13, 2024.
• SSR Mining continues to work closely with the relevant authorities to secure the required permits for the East Storage Facility and the restart of the pler mine.
• The fourth quarter of 2024 is expected to be Marigold's strongest production and lowest cost quarter.

Industry Context

The report reflects the challenges faced by mining companies when dealing with operational incidents, particularly in the context of environmental and safety concerns. The focus on remediation and community support is in line with industry best practices. The company's ability to maintain production guidance at other sites demonstrates resilience and diversification.

Comparison to Industry Standards

• SSR Mining's AISC of $2,116 per gold equivalent ounce is higher than the industry average for gold producers, which typically ranges between $1,000 to $1,400 per ounce, however this is heavily impacted by the pler incident.
• Companies like Newmont and Barrick Gold, which are larger gold producers, often have lower AISC due to economies of scale and more diversified operations.
• The remediation costs at pler, estimated at $250 to $300 million, are significant and will likely impact SSR Mining's financial performance compared to peers without similar incidents.
• The production guidance of 340,000 to 380,000 gold equivalent ounces for Marigold, Seabee, and Puna is relatively modest compared to larger producers, but is in line with the company's size and operational focus.
• The record throughput at Puna is a positive sign, indicating operational efficiency and potential for future growth, which is comparable to other silver producers in the region.

Stakeholder Impact

• Shareholders are negatively impacted by the lower financial results and the uncertainty surrounding the pler mine.
• Employees at the pler mine are impacted by the suspension of operations, although the company has retained a full complement of salaried staff.
• The local community near the pler mine is impacted by the incident, and the company is providing support.
• Customers may be impacted by the reduced production of gold and other metals.
• Suppliers and creditors may be impacted by the company's financial performance.

Next Steps

• SSR Mining will continue to focus on remediation efforts at the pler mine.
• The company will work to secure the necessary permits for the East Storage Facility and the restart of the pler mine.
• SSR Mining will continue to advance the Hod Maden project towards a construction decision.
• The company will provide further updates on the pler incident through press releases and website posts.
• SSR Mining will focus on achieving its full-year production guidance for Marigold, Seabee, and Puna.

Key Dates

Keywords

SSR Mining, Gold Production, Silver Production, Pler Mine, Mine Remediation, Financial Results, Operating Cash Flow, Free Cash Flow, AISC, Liquidity, Mining Incident