VANCOUVER, Aug. 8, 2019 /CNW/ - SSR Mining Inc.
(NASDAQ: SSRM) (TSX: SSRM) ("SSR Mining") reports consolidated
financial results for the second quarter ended June 30,
2019.
Paul Benson, President and CEO
said, "The operations continued to deliver with nearly 100,000 gold
equivalent ounces produced in the quarter at slightly better all-in
sustaining costs. Our exploration announcement last month
highlighted the prospectivity at our key operating assets, as well
as our ability to continue investing to extend mine life due to our
strong balance sheet. This financial strength is allowing us to
expand our land positions and maintain exposure to high grade
development projects like Las Chispas, through our investment in
SilverCrest. Our continued operational delivery positions us to
achieve guidance and, coupled with our announcements, allows us to
add shareholder value again in 2019."
Second Quarter 2019 Highlights:
(All figures are in U.S. dollars unless otherwise
noted)
- On track for higher annual gold equivalent production:
Achieved quarterly consolidated production of 98,334 gold
equivalent ounces at cash costs of $775 per payable ounce of gold sold.(1)
- Improved financial performance: Reported positive
income from mine operations at all three operations totaling
$29.8 million, net income of
$12.4 million and adjusted
attributable net income of $17.8
million or $0.15 per
share.(1)
- Solid production at the Seabee Gold Operation: Produced
26,539 ounces of gold at cash costs of $526 per payable ounce of gold sold.(1)
- Strong operating performance at the Marigold mine:
Produced 54,922 ounces of gold at cash costs of $835 per payable ounce of gold sold, while
placing 28% more ore on leach pads than the first quarter at lower
unit mining costs and at higher gold grade.(1)
- Increased sales at lower costs at Puna
Operations: Produced 1.5 million ounces of silver at lower
cash costs of $9.80 per payable ounce
of silver sold and achieved silver sales of 2.7 million
ounces.(1)
- Maintained strong balance sheet and liquidity: Reported
cash balance of $452 million and
$75 million of undrawn credit
facility.
- Acquired 8,900 hectares contiguous to the Marigold mine:
Attractive land package on trend with several zones of gold
mineralization, net of a net smelter returns ("NSR") royalty.
Consideration totaled $22 million in
cash and assumption of long term environmental and reclamation
obligations.
- Published inaugural Sustainability Report: Report
outlines our approach to sustainability and underscores our
commitment to transparency with our stakeholders.
- Increased production guidance: We expect to produce
400,000 gold equivalent ounces in 2019 due to strong production
results at all three mines.
Subsequent to Second Quarter 2019:
- Announced agreement to acquire remaining 25% interest in
Puna Operations for aggregate consideration of $34 million: Provides near-term, low-risk
silver production growth and simplifies management structure.
- Exercised equity participation right in SilverCrest Metals
financing: Maintained our exposure to the high grade,
developable Las Chispas project through the purchase of additional
common shares for total consideration of up to $3.5 million.
- Exploration success at Red Dot deposit: We expect to
extend the current Marigold life of mine plan into the early 2030's
without the need for expansion capital with Red Dot phases 1, 2 and
3.
(1)
|
We report the
non-GAAP financial measures of cash costs per payable ounce of gold
and silver sold and adjusted attributable net income to manage and
evaluate operating performance at the Marigold mine, the Seabee
Gold Operation and Puna Operations. See "Cautionary Note Regarding
Non-GAAP Measures".
|
Marigold mine, U.S.
|
Three months
ended
|
Operating
data
|
June 30
2019
|
March 31
2019
|
December 31
2018
|
September
30
2018
|
June
30
2018
|
Total material mined
(kt)
|
19,254
|
17,295
|
17,039
|
21,284
|
15,958
|
Waste removed
(kt)
|
12,185
|
11,767
|
11,361
|
14,411
|
8,083
|
Total ore stacked
(kt)
|
7,070
|
5,528
|
5,679
|
6,873
|
7,875
|
Strip
ratio
|
1.7
|
2.1
|
2.0
|
2.1
|
1.0
|
Mining cost ($/t
mined)
|
1.65
|
1.73
|
1.86
|
1.51
|
1.92
|
Gold stacked grade
(g/t)
|
0.38
|
0.34
|
0.34
|
0.32
|
0.42
|
Processing cost ($/t
processed)
|
1.01
|
1.20
|
1.27
|
1.12
|
0.86
|
Gold recovery
(%)
|
75.0
|
73.0
|
72.9
|
72.3
|
74.4
|
General and admin
costs ($/t processed)
|
0.47
|
0.54
|
0.51
|
0.50
|
0.41
|
|
|
|
|
|
|
Gold produced
(oz)
|
54,922
|
53,151
|
54,306
|
58,459
|
49,436
|
Gold sold
(oz)
|
59,702
|
55,517
|
50,550
|
59,612
|
46,644
|
|
|
|
|
|
|
Realized gold price
($/oz) (1)
|
1,309
|
1,303
|
1,227
|
1,207
|
1,304
|
|
|
|
|
|
|
Cash costs ($/oz)
(1)
|
835
|
812
|
760
|
711
|
700
|
AISC ($/oz)
(1)
|
1,008
|
984
|
995
|
965
|
981
|
|
|
|
|
|
|
Financial data
($000s)
|
|
|
|
|
|
Revenue
|
78,039
|
72,263
|
61,861
|
71,848
|
60,752
|
Income from mine
operations
|
13,939
|
12,981
|
9,977
|
13,254
|
14,670
|
Capital expenditures
(2)
|
6,924
|
3,167
|
8,328
|
25,461
|
14,481
|
Capitalized
stripping
|
871
|
2,293
|
1,208
|
2,529
|
850
|
Exploration
expenditures (3)
|
2,452
|
3,653
|
2,096
|
2,956
|
3,243
|
(1)
|
We report the
non-GAAP financial measures of realized gold price, cash costs and
all-in sustaining costs ("AISC") per payable ounce of gold sold to
manage and evaluate operating performance at the Marigold mine. See
"Cautionary Note Regarding Non-GAAP Measures".
|
(2)
|
Includes expansion
capital expenditure of $22 million in 2018.
|
(3)
|
Includes
capitalized and expensed exploration expenditures.
|
Mine production
In the second quarter of 2019, the Marigold mine produced 54,922
ounces of gold, a 3% increase over the first quarter, mainly due to
higher gold grade and ore mined, which was stacked on lower areas
of the leach pads. Gold sales for the second quarter totaled 59,702
ounces, 8% higher than the previous quarter as we sold a portion of
accumulated bullion inventory.
During the quarter, 19.3 million tonnes of material were mined,
an 11% increase compared to the first quarter of 2019, due to
improved hauling efficiency and shorter haul distances.
Approximately 7.1 million tonnes of ore were delivered to the
heap leach pads at a grade of 0.38 g/t gold in the quarter. This
compares to 5.5 million tonnes of ore delivered to the heap leach
pads at a gold grade of 0.34 g/t in the first quarter of 2019. The
strip ratio was 1.7:1 for the quarter, 19% lower than the prior
quarter.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold and
realized gold prices are non-GAAP financial measures. Please see
"Cautionary Note Regarding Non-GAAP Measures".
Cash costs, which include all costs of inventory, refining costs
and royalties, of $835 per payable
ounce of gold sold in the second quarter of 2019 were 3% higher
than the previous quarter. This was primarily due to higher opening
cash costs of leach pad inventory combined with less mining costs
being capitalized as stripping in the second quarter compared to
the first quarter. Total mining costs of $1.65 per tonne in the second quarter of 2019
were 5% lower than in the previous quarter primarily due to 11%
more tonnes mined. Processing and general administrative unit costs
were 16% and 13% lower, respectively, in the second quarter than in
the first quarter due to higher tonnes stacked while total related
costs remained stable.
AISC per payable ounce of gold sold increased in the second
quarter of 2019 to $1,008 from
$984 in the first quarter due to
higher cash costs with higher sustaining capital expenditures,
offset by lower capitalized stripping and lower exploration
expenditures.
Mine sales
A total of 59,702 ounces of gold were sold at an average
realized gold price of $1,309 per
ounce during the second quarter of 2019, an increase of 7.5% from
the 55,517 ounces of gold sold at an average realized gold price of
$1,303 per ounce during the first
quarter of 2019. Sales were higher than production during the
quarter as finished goods inventory was sold.
Exploration
The main focus of our 2019 exploration program has been to
increase Red Dot Mineral Reserves, through completion of
geotechnical and QA/QC core drilling to provide sufficient data for
detailed mine planning. Ancillary to this has been continued
exploration drilling for additional mineral resources north and
south of Red Dot, in the Mackay pit and at Valmy and East Basalt
areas. During the second quarter, we completed a total of 66
reverse circulation drill holes for 25,167 meters on these
targets.
In the first half of 2019, our Red Dot exploration program
focused on geotechnical drilling and engineering with the goal of
declaring additional Mineral Reserves at Red Dot. We completed
preliminary pit designs and related economic evaluations referred
to as the Marigold Equipment Replacement Study. These evaluations
were completed with strict economic return and investment
thresholds and were based on prevailing assumptions, which include
a gold price of $1,250 per ounce. Red
Dot is anticipated to extend the Marigold mine life into the early
2030's, without requiring expansion of the mining fleet or the
associated expansion capital.
Also, at Marigold, infill drill results for the Mackay pit and
the North and South Red Dot areas are expected to add to existing
Mineral Reserves and Mineral Resources at year-end 2019. Additional
information regarding such drilling was published in our news
release dated July 30, 2019.
Exploration and permitting activities are scheduled through the
second half of 2019 at the Mackay pit, North and South Red Dot,
Valmy, East Basalt, and the newly acquired Trenton Canyon areas,
aimed at extending known gold mineralization and discovery. We
expect to commence the first phase of our exploration program at
the Trenton Canyon property, which lies immediately south of
Marigold, in the third quarter of 2019.
Seabee Gold Operation, Canada
|
Three months
ended
|
Operating
data
|
June 30
2019
|
March 31
2019
|
December 31
2018
|
September 30
2018
|
June 30
2018
|
Total ore milled
(t)
|
88,424
|
90,756
|
86,447
|
88,273
|
84,010
|
Ore milled per day
(t/day)
|
971
|
1,008
|
940
|
959
|
923
|
Gold mill feed grade
(g/t)
|
9.83
|
8.59
|
10.20
|
9.52
|
7.95
|
Mining costs ($/t
mined)
|
53
|
52
|
57
|
48
|
60
|
Processing costs ($/t
milled)
|
35
|
28
|
26
|
26
|
27
|
Gold recovery
(%)
|
98.4
|
97.2
|
97.6
|
97.1
|
97.3
|
General and admin
costs ($/t milled)
|
50
|
53
|
63
|
47
|
62
|
|
|
|
|
|
|
Gold produced
(oz)
|
26,539
|
31,183
|
20,473
|
27,831
|
23,582
|
Gold sold
(oz)
|
24,276
|
27,999
|
21,711
|
29,175
|
20,512
|
|
|
|
|
|
|
Realized gold price
($/oz) (1)
|
1,329
|
1,302
|
1,236
|
1,210
|
1,306
|
|
|
|
|
|
|
Cash costs ($/oz)
(1)
|
526
|
467
|
502
|
447
|
616
|
AISC ($/oz)
(1)
|
871
|
973
|
743
|
596
|
854
|
|
|
|
|
|
|
Financial data
($000s)
|
|
|
|
|
|
Revenue
|
32,237
|
36,431
|
26,890
|
35,270
|
26,706
|
Income from mine
operations
|
11,762
|
13,672
|
7,347
|
11,061
|
5,703
|
Capital
expenditures
|
3,358
|
8,772
|
625
|
968
|
1,035
|
Capitalized
development
|
3,345
|
3,379
|
2,910
|
1,812
|
2,069
|
Exploration
expenditures (2)
|
2,257
|
3,172
|
1,661
|
2,860
|
2,745
|
(1)
|
We report the
non-GAAP financial measures of realized gold price, cash costs and
AISC per payable ounce of gold sold to manage and evaluate
operating performance at the Seabee Gold Operation. See "Cautionary
Note Regarding Non-GAAP Measures".
|
(2)
|
Includes
capitalized and expensed exploration expenditures.
|
Mine production
Seabee Gold Operation produced 26,539 ounces of gold in the
second quarter, a 15% decrease from the first quarter mainly due to
timing of gold pours at year-end 2018 that led to higher gold
production in the first quarter of 2019. Gold sales totaled 24,276
ounces for the second quarter, a decrease of 13% from the first
quarter.
The four new pieces of underground equipment, delivered over the
ice road in the first quarter, were commissioned at the beginning
of the second quarter and are operating at the Santoy mining
complex. The mill achieved an average throughput of 971 tonnes per
day over the second quarter, a 4% decline compared to the previous
quarter largely due to planned modifications to the electrical
distribution system as part of the tailings expansion project. Gold
mill feed grade was 9.83 g/t, 14% higher compared to the first
quarter and in line with plan. Gold recovery for the second quarter
was 98.4%, a 1.2% increase over the first quarter. Mill throughput
is expected to increase through the second half of the year
relative to the second quarter.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold and
realized gold prices are non-GAAP financial measures. Please see
"Cautionary Note Regarding Non-GAAP Measures".
Cash costs per payable ounce of gold sold, which include all
costs of inventory and refining costs, were $526 in the second quarter of 2019, higher than
the $467 in the first quarter of
2019. Higher cash costs per payable ounce sold were primarily the
result of incurring similar total operating costs while producing
fewer ounces due to lower tonnes at higher grade. Total mining
costs were $53 per tonne in the
second quarter of 2019, in line with the previous quarter.
Processing unit costs increased by 25% in the second quarter of
2019 compared to the first quarter of 2019, due to lower tonnes
milled impacted by planned maintenance and expenses related to the
seasonal operation of the water treatment facility. General and
administrative costs per tonne decreased by 6% in the second
quarter of 2019 compared to the first quarter of 2019, due to the
annual incentives paid in the first quarter.
AISC per payable ounce of gold sold were $871 in the second quarter of 2019, 10% lower
than the $973 in the first quarter of
2019. This decrease was primarily due to the seasonal nature of our
sustaining capital expenditures as equipment and materials are
purchased primarily in the first quarter of each year for delivery
on the ice road.
Mine sales
A total of 24,276 ounces of gold were sold at an average
realized gold price of $1,329 per
ounce during the second quarter of 2019, compared to the 27,999
ounces of gold sold in the first quarter of 2019, at an average
realized gold price of $1,302 per
ounce of gold. Gold sales for the second quarter were 13% lower
than the first quarter primarily due to lower production.
Exploration
In 2019, the Seabee Gold Operation plans 45,000 meters of
underground drilling and 15,000 meters of surface drilling with the
objective to increase and convert Mineral Resources into Mineral
Reserves near the Santoy mine. During the second quarter of 2019,
close to the Santoy mine area, we completed 20,379 meters of
surface and underground drilling in 49 holes. Our surface and
underground drill activities focused mostly on Santoy Gap hanging
wall ("Gap HW") with a smaller number of holes completed on Santoy
Gap and Santoy 8A zones. Additional information regarding such
drilling was published in our news release dated July 30, 2019. We anticipate that Gap HW will
make a positive contribution to Mineral Resources when estimated
and reported at year-end 2019.
Greenfields exploration at the Seabee Gold Operation and Fisher
property intersected new mineralized zones at the Batman Lake and
Mac targets, respectively, where we are targeting new gold
discoveries.
In addition, exploration activities outside the Santoy mine area
began in June and are focused on mineral resource discovery at the
Seabee Gold Operation and the Fisher project. This work comprises
field programs of soil geochemistry, prospecting, trenching, and
geologic mapping that are conducted from fly-in camps located at
strategic points along the Santoy shear. Prospecting work has
already located anomalous gold mineralization in bedrock 500 metres
north of the Mac area drill intercept previously reported in the
first quarter of 2019.
Puna Operations, Argentina
(75% interest)
(amounts presented on 100% basis unless
otherwise stated)
|
Three months
ended
|
Operating
data
|
June 30
2019
|
March 31
2019
|
December 31
2018
|
September 30
2018
|
June 30
2018
|
Total material mined
(kt) (1)
|
3,304
|
2,618
|
897
|
—
|
—
|
Waste removed (kt)
(1)
|
3,114
|
2,469
|
696
|
—
|
—
|
Strip ratio
(1)
|
16.3
|
16.5
|
3.5
|
—
|
—
|
Mining costs ($/t
mined) (1)
|
2.33
|
2.74
|
2.61
|
—
|
—
|
Ore milled
(kt)
|
313
|
345
|
342
|
308
|
396
|
Silver mill feed
grade (g/t)
|
160
|
235
|
133
|
96
|
110
|
Lead mill feed grade
(%) (1)
|
0.71
|
1.07
|
0.92
|
—
|
—
|
Zinc mill feed grade
(%)
|
0.46
|
0.46
|
1.14
|
1.25
|
0.71
|
Processing costs ($/t
milled)
|
32.57
|
29.62
|
22.18
|
20.87
|
17.26
|
Silver recovery
(%)
|
92.4
|
91.7
|
81.5
|
69.9
|
68.1
|
Lead recovery (%)
(1)
|
79.4
|
83.6
|
83.1
|
—
|
—
|
Zinc recovery
(%)
|
48.1
|
47.3
|
49.5
|
38.1
|
31.5
|
General and admin
costs ($/t milled)
|
8.27
|
8.02
|
8.16
|
7.98
|
7.07
|
|
|
|
|
|
|
Silver produced ('000
oz)
|
1,486
|
2,392
|
1,189
|
666
|
954
|
Silver sold ('000
oz)
|
2,679
|
927
|
932
|
623
|
1,142
|
|
|
|
|
|
|
Lead produced ('000
lb) (2)
|
3,879
|
6,789
|
2,735
|
372
|
—
|
Lead sold ('000 lb)
(2)
|
7,652
|
2,977
|
1,059
|
—
|
—
|
|
|
|
|
|
|
Zinc produced ('000
lb) (3)
|
1,539
|
1,640
|
4,014
|
3,241
|
1,520
|
Zinc sold ('000 lb)
(3)
|
5,757
|
3,218
|
1,983
|
382
|
—
|
|
|
|
|
|
|
Realized silver price
($/oz) (4)
|
14.92
|
15.35
|
14.42
|
15.45
|
16.49
|
|
|
|
|
|
|
Cash costs ($/oz)
(4)
|
9.80
|
9.94
|
15.02
|
17.41
|
14.73
|
AISC ($/oz)
(4)
|
14.28
|
19.76
|
20.45
|
22.39
|
17.66
|
|
|
|
|
|
|
Financial Data
($000s)
|
|
|
|
|
|
Revenue
|
44,873
|
17,556
|
14,961
|
7,915
|
16,570
|
Income (loss) from
mine operations
|
4,126
|
3,584
|
(788)
|
(2,440)
|
830
|
Capital expenditures
(5)
|
3,119
|
1,543
|
3,849
|
2,390
|
2,652
|
Capitalized
stripping
|
7,302
|
6,191
|
—
|
—
|
—
|
Exploration
expenditures (5)
|
65
|
1
|
21
|
6
|
429
|
(1)
|
Data for the
fourth quarter of 2018 is for the period subsequent to December 1,
2018, the date upon which commercial production was declared at the
Chinchillas mine.
|
(2)
|
Data for lead
production and sales relate only to lead in lead
concentrate.
|
(3)
|
Data for zinc
production and sales relate only to zinc in zinc
concentrate.
|
(4)
|
We report the
non-GAAP financial measures of realized silver price, cash costs
and AISC per payable ounce of silver sold to manage and evaluate
operating performance at Puna Operations. See "Cautionary Note
Regarding Non-GAAP Measures".
|
(5)
|
Does not include
exploration or development of the Chinchillas
project.
|
Mine production
Puna Operations produced 1.5 million ounces of silver for the
second quarter of 2019, 38% lower than the first quarter, mainly
due to lower silver grades, consistent with plan, and processing
less ore. Silver sales totaled 2.7 million ounces as we began to
deliver silver/lead and zinc concentrates into annual contracts
with the aim of aligning quarterly production and sales. On an
attributable basis, silver production and sales for the second
quarter totaled 1.1 million ounces and 2.0 million ounces,
respectively.
During the second quarter, ore was milled at an average rate of
3,436 tonnes per day, an 11% decrease compared to the previous
quarter, mainly due to maintenance of control systems and continued
de-bottlenecking of the new tailings pumping system that is
expected to continue through the third quarter of 2019. Processed
ore in the second quarter of 2019 contained an average silver grade
of 160 g/t, a 32% decrease compared to the first quarter,
consistent with the mine plan and average silver reserve grade. The
strip ratio during the second quarter was 16:1 as mining of the
next phase at the Chinchillas pit continues as planned.
Mine operating costs
Cash costs and AISC per payable ounce of silver sold and
realized silver prices are non-GAAP financial measures. Please see
"Cautionary Note Regarding Non-GAAP Measures".
Cash costs, which include cost of inventory, treatment and
refining costs, provincial royalties and export duties and
by-product credits, were $9.80 per
payable ounce of silver sold in the second quarter of 2019, a
decline from the $9.94 per payable
ounce of silver sold in the first quarter of 2019 principally due
to lower mining costs and an increase in by-product revenue. This
benefit was partly offset by an increase in processing and general
and administrative unit costs by 10% and 3%, respectively, when
compared to the previous quarter.
AISC per payable ounce of silver sold in the second quarter of
2019 was $14.28, 28% lower than
$19.76 in the first quarter of 2019.
The decrease in AISC was primarily due to an increase in silver
ounces sold during the period.
Mine sales
Silver sales totaled 2.7 million ounces and attributable sales
were 2.0 million ounces in the second quarter of 2019, each a 189%
increase from the first quarter of 2019. Lead sales totaled 7.7
million pounds and attributable sales were 5.7 million pounds in
the second quarter of 2019, each a 157% increase from the first
quarter of 2019. Zinc sales totaled 5.8 million pounds and
attributable sales were 4.3 million pounds in the second quarter of
2019, each a 79% increase from the first quarter of 2019.
Chinchillas project, Argentina
Construction advanced with the completion of the in-pit tailings
pumping system that was commissioned in the first quarter of 2019.
Optimization of the operating efficiency and reliability of the
system is ongoing.
The power generation was permanently connected to the medium
voltage line to the Chinchillas mine during the second quarter.
Infrastructure works at the Chinchillas site saw significant
progress with the completion of the effluent treatment plant,
external services, external illumination, dining room, change
house, offices, warehouse and fuel plant. Work continues on the
nitrate storage and diesel fueling station. At the
Chinchillas truck shop, installation of the equipment doors,
special installations and bridge crane is expected to be completed
in the third quarter. The project remains on budget.
Outlook
This section of the news release provides management's
production, cost, capital, exploration and development expenditure
estimates for 2019. Please see "Cautionary Note Regarding
Forward-Looking Statements."
Due to strong asset operating performance in the first half of
2019 combined with continued positive momentum at our operations,
we are revising certain guidance metrics as follows:
Revised Operating
Guidance
|
|
Marigold
mine
|
Seabee Gold
Operation
|
Puna
Operations (4)
|
Gold
Production
|
oz
|
205,000 -
220,000
|
100,000 -
110,000
|
—
|
Silver
Production
|
Moz
|
—
|
—
|
6.5 - 7.5
|
Lead
Production
|
Mlb
|
—
|
—
|
20.0 -
22.0
|
Zinc
Production
|
Mlb
|
—
|
—
|
7.0 - 9.0
|
Cash Cost per Payable
Ounce Sold (1)
|
$/oz
|
780 - 800
|
475 - 505
|
9.75 -
11.25
|
Sustaining Capital
Expenditures (2)
|
$M
|
35
|
25
|
15
|
Capitalized Stripping
/ Capitalized Development
|
$M
|
15
|
12
|
24
|
Exploration
Expenditures (3)
|
$M
|
9
|
6
|
1
|
(1)
|
We report the
non-GAAP financial measure of cash costs per payable ounce of gold
and silver sold to manage and evaluate operating performance at the
Marigold mine, the Seabee Gold Operation and Puna Operations. See
"Cautionary Note Regarding Non-GAAP Measures".
|
(2)
|
Sustaining capital
expenditures for Puna Operations exclude initial capital
expenditures related to the development of the Chinchillas
project.
|
(3)
|
Includes
capitalized and expensed exploration expenditures.
|
(4)
|
Shown on a 100%
basis. We own 75% of Puna Operations.
|
Marigold mine production guidance is increased to between
205,000 and 220,000 ounce of gold reflecting the higher ounces
stacked on the leach pads earlier in 2019 due to pit optimization.
Our cash cost guidance range is narrowed and raised to between
$780 and $800 per payable ounce of gold sold. Sequencing
of waste mining to optimize pit values has reduced capitalized
stripping costs, increasing the amount remaining in cost of
inventory. Guidance for capitalized stripping has been
commensurately reduced from $20
million to $15 million. In
addition, higher gold prices will impact reported cash costs at
Marigold which include an approximate aggregate 10% NSR royalty
and, therefore, every $100 increase
in gold price increases cash costs by approximately $10 per payable ounce of gold sold.
Similarly, Seabee Gold Operation guidance range is improved with
the production range increased to between 100,000 and 110,000
ounces due to higher mined grades. As a result of such higher
mined grades, cash cost guidance is reduced to between $475 and $505 per
payable ounce of gold sold, further demonstrating its position as a
high margin operation.
With the start-up of commercial operations at the Chinchillas
mine on December 1, 2018, actual
operating performance is reflected in revised Puna Operations
guidance. Zinc recovery from the Chinchillas ore has been lower
than projected, reflecting both our focus on increasing silver
recovery above pre-feasibility study estimates, and lower than
expected performance of the zinc circuit to date.
Due to these factors, silver production guidance has been
increased to between 6.5 and 7.5 million ounces with zinc
production decreased to between 7 and 9 million pounds. Lead
production has been adjusted marginally to between 20 and 22
million pounds. The resulting lower base metal by-product credits
combined with actual unit cost performance result in cash cost
guidance increasing to between $9.75
and $11.25 per payable ounce of
silver sold. The mine remains on an aggressive stripping schedule
for the balance of 2019 with capitalized stripping increasing by
$4 million to $24 million.
We now expect to produce in 2019, on a consolidated basis,
400,000 gold equivalent ounces at gold equivalent cash costs of
between $710 and $760 per payable ounce sold.
Gold equivalent figures for our 2019 operating guidance are
based on a gold-to-silver ratio of 85:1. Cash costs and capital
expenditures guidance is based on an oil price of $65 per barrel and exchange rate of 1.25 Canadian dollars to one U.S. dollar.
Consolidated Financial Summary
(presented in
thousands of U.S. dollars, except for per share value)
Selected Financial
Data (1)
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
2019
|
2018
|
2019
|
2018
|
|
$
|
$
|
$
|
$
|
Revenue
|
155,149
|
104,028
|
281,399
|
201,930
|
Income from mine
operations
|
29,827
|
21,203
|
60,064
|
38,434
|
Gross margin
(%)
|
19
|
20
|
21
|
19
|
Operating
income
|
19,591
|
8,883
|
39,219
|
16,614
|
Net income
|
12,414
|
2,607
|
18,146
|
285
|
Basic attributable
income per share
|
0.09
|
0.04
|
0.14
|
0.03
|
Adjusted attributable
income before tax
|
18,426
|
13,051
|
38,988
|
19,787
|
Adjusted attributable
net income
|
17,788
|
12,080
|
34,004
|
17,742
|
Adjusted basic
attributable income per share
|
0.15
|
0.10
|
0.28
|
0.15
|
Cash generated by
operating activities
|
33,367
|
17,132
|
33,064
|
28,139
|
Cash generated by
(used in) investing activities
|
(44,955)
|
1,731
|
(78,717)
|
3,118
|
Cash generated by
financing activities
|
791
|
4,248
|
78,232
|
6,164
|
|
|
|
|
|
Financial
Position
|
June 30,
2019
|
December 31,
2018
|
Cash and cash
equivalents
|
|
452,160
|
|
419,212
|
Marketable
securities
|
|
37,712
|
|
29,542
|
Current
assets
|
|
798,010
|
|
733,119
|
Current
liabilities
|
|
198,325
|
|
83,254
|
Working
capital
|
|
599,685
|
|
649,865
|
Total
assets
|
|
1,650,222
|
|
1,521,138
|
(1)
|
We report non-GAAP
financial measures including income from mine operations, operating
income, adjusted attributable income before tax, adjusted
attributable net income, adjusted basic attributable income per
share, and working capital to manage and evaluate our operating
performance. Please see "Cautionary Note Regarding Non-GAAP
Measures".
|
Quarterly financial summary
Revenue in the second quarter of 2019 increased 49% relative to
the comparative quarter of 2018 due to an increase in sales at Puna
Operations, as we began to deliver silver/lead and zinc
concentrates into annual contracts, as well as an increase in gold
sales at the Marigold mine and Seabee Gold Operation due to an
increase in gold production.
Income from mine operations in the second quarter of 2019
generated a gross margin of 19%, in line with the 20% gross margin
generated in the second quarter of 2018. Relative to the prior
quarter, income from mine operations generated by the Seabee Gold
Operation and Puna Operations were higher, while the Marigold mine
generated a lower gross margin due to higher cost of sales, offset
partially by a slightly higher realized gold price.
In the second quarter of 2019, we generated net income of
$12.4 million, an increase compared
to net income of $2.6 million in the
second quarter of 2018.
Cash generated from operating activities in the quarter
increased to $33.4 million compared
to $17.1 million generated in the
second quarter of 2018. Both the Seabee Gold Operation and Puna
Operations had higher sales at lower unit costs while the Marigold
mine had higher gold sales at higher unit costs. Cash from
operating activities was negatively impacted by a $11.4 million increase in non-cash working
capital, compared to a $4.4 million
increase in the second quarter of 2018, due primarily to an
increase in trade receivables in the second quarter of 2019 related
to concentrates sales from Puna Operations.
Investing activities used $45.0
million of cash in the second quarter of 2019. This included
expenditures of $9.1 million on
property, plant and equipment, $22.0
million to acquire the Trenton Canyon and Buffalo
Valley properties (the "Properties"), capitalized stripping costs
of $7.3 million and $4.8 million on the Chinchillas project. This
compared to $1.7 million generated
from investing activities in the second quarter of 2018. In
the second quarter of 2018, we received $35.4 million from the sales of common shares of
Pretium Resources Inc. ("Pretium"), which was partially offset by
investing $11.4 million in property,
plant and equipment, and $16.1
million on the Chinchillas project.
Cash generated from financing activities was $0.8 million in the second quarter of 2019,
compared to cash generated of $4.2
million in the second quarter of 2018.
Year-to-date financial summary
Revenue in the first half of 2019 increased by 39% compared to
the first half of 2018 due to a 63% increase in payable ounces of
silver sold at Puna Operations, offset partially by lower realized
silver price, as well as an increase in payable ounces of gold sold
at the Marigold mine and Seabee Gold Operation by 30% and 29%,
respectively, partially offset by lower realized gold price.
Income from mine operations in the first half of 2019 generated
a gross margin of 21%, compared to a 19% gross margin in the first
half of 2018, primarily due to lower cost of sales at the Seabee
Gold Operation and Puna Operations, partially offset by higher cost
of sales at the Marigold mine. Net income in the first half of 2019
was $18.1 million, compared to net
income of $0.3 million in the first
half of 2018.
Cash generated by operating activities in the first half of 2019
increased to $33.1 million compared
to $28.1 million in the first half of
2018. Both the Seabee Gold Operation and Puna Operations had higher
sales at lower unit costs while the Marigold mine had higher gold
sales at higher unit costs. Investing activities used $78.7 million in the first half of 2019 compared
to generating $3.1 million in the
first half of 2018. In the first half of 2019, we invested
$22.3 million in property, plant and
equipment, $22.0 million to acquire
the Properties, $15.8 million in
capitalized stripping costs and $11.0
million in the Chinchillas project. We also received
$5.7 million from our joint venture
partner for its share of development costs related to the
Chinchillas project in the first half of 2019. In the first
half of 2018, we received $63.4
million from the sales of common shares of Pretium, which was
partially offset by investing $20.2
million in property, plant and equipment, and $27.8 million on the Chinchillas project.
Corporate summary
SSR Mining has an experienced management team of mine-builders
and operators with proven capabilities. We have a strong balance
sheet with $452.2 million in cash and
cash equivalents as at June 30, 2019. We are committed to
delivering safe production through relentless emphasis on
Operational Excellence. We are also focused on growing production
and Mineral Reserves through the exploration and acquisition of
assets for accretive growth, while maintaining financial
strength.
On March 19, 2019, we issued
$230.0 million aggregate principal
amount of 2.50% unsecured convertible senior notes (the "2019
Notes") for net proceeds of $222.9
million after payment of commissions and expenses related to
the offering.
Of the proceeds from the 2019 Notes, $152.3 million was used to repurchase, in
separate privately negotiated transactions, $150 million of our outstanding $265 million 2.875% senior convertible notes.
On June 27, 2019, we acquired
approximately 8,900 hectares contiguous to the Marigold mine,
comprised of a 100% interest in the Trenton Canyon and Buffalo
Valley properties from Newmont Goldcorp Corporation and Fairmile
Gold Mining, Inc., net of a 0.5% NSR royalty on the Properties. The
aggregate purchase price included $22
million in cash and the assumption of related long-term
environmental and reclamation obligations with a carrying value of
approximately $13 million at
June 30, 2019. The acquisition of the
Properties increases Marigold's land position by 84%, provides an
opportunity to increase gold mineral resources and adds multiple
zones of mineralization as potential exploration targets.
On July 22, 2019, we entered into
a definitive agreement (the "Agreement") whereby we will acquire
the remaining 25% interest in Puna Operations Inc. from Golden
Arrow Resources Corporation ("Golden Arrow") for aggregate
consideration totaling approximately $34
million (the "Transaction"). The Transaction allows us to
consolidate ownership in Puna Operations and streamline our
reporting structure, allowing for cost savings and operational
flexibility. The Transaction also provides us with near-term
low-risk silver production growth, with our 2019 annual silver
production expected to increase to 7.0 million ounces, based on
mid-point of our revised guidance. Under the terms of the
Agreement, aggregate consideration will consist of the
following:
- $2.3 million in cash payable upon
closing of the Transaction;
- Cancellation of the outstanding principal and accrued interest
on the $10 million non-revolving term
loan to Golden Arrow;
- Approximately $20 million in
common shares of SSR Mining determined by the 20-day volume
weighted average price of our common shares on the Toronto Stock
Exchange ending on the last trading day prior to the closing date
of the Transaction;
- Payment of Golden Arrow's portion of any cash calls made by
Puna Operations under the shareholders' agreement until the closing
of the Transaction; and
- Transfer to Golden Arrow for cancellation of the 4,285,714
common shares of Golden Arrow held by us, which have an approximate
value of $0.8 million.
Completion of the Transaction is subject to approval by the
Golden Arrow shareholders, regulatory approvals and other customary
closing conditions. The Transaction includes customary provisions,
including non-solicitation of alternative transactions and a
break-up fee. The Transaction is expected to close in the fourth
quarter of 2019.
On July 23, 2019, we elected to
exercise our equity participation right pursuant to our agreement
with SilverCrest Metals Inc. ("SilverCrest") dated November 28, 2018 to purchase between 718,000 and
780,000 common shares of SilverCrest (the total number of common
shares purchased will depend on whether the over-allotment option
under the Offering is exercised) on the same terms as the bought
deal offering announced by SilverCrest on July 23, 2019 (the "Offering"), subject to
closing of the Offering. The additional shares will be acquired at
a price of C$5.85 per common share
for total consideration of between $3.2
million and $3.5 million. Upon
closing, we will own approximately 9.9% of the issued and
outstanding common shares of SilverCrest on a non-diluted
basis.
Qualified Persons
The scientific and technical information contained in this news
release relating to the Marigold mine has been reviewed and
approved by Greg Gibson, P.E. and James N.
Carver, each of whom is a SME Registered Member and a
qualified person under National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101"). Mr. Gibson is
our General Manager and Mr. Carver is our Chief Geologist at the
Marigold mine. The scientific and technical information contained
in this news release relating to the Seabee Gold Operation has been
reviewed and approved by Cameron
Chapman, P.Eng., and Jeffrey
Kulas, P.Geo., each of whom is a qualified person under NI
43-101. Mr. Chapman is our General Manager and Mr. Kulas is our
Manager Geology, Mining Operations at the Seabee Gold Operation.
The scientific and technical information contained in this news
release relating to Puna Operations has been reviewed and approved
by Robert Gill, P.Eng., and F.
Carl Edmunds, P.Geo., each of whom
is a qualified person under NI 43-101. Mr. Gill is our General
Manager at Puna Operations and Mr. Edmunds is our Vice President,
Exploration.
Management Discussion & Analysis and Conference
Call
This news release should be read in conjunction with our
unaudited Condensed Consolidated Interim Financial Statements and
our Management's Discussion and Analysis as filed with the Canadian
Securities Administrators and available at www.sedar.com or our
website at www.ssrmining.com.
- Conference call and webcast: Friday,
August 9, 2019, at 11:00 am
ET.
Toll-free in U.S. and
Canada:
|
+1 (800)
319-4610
|
All other
callers:
|
+1 (416)
915-3239
|
Webcast:
|
http://ir.ssrmining.com/investors/events
|
- The conference call will be archived and available on our
website. Audio replay will be available for two weeks by
calling:
Toll-free in U.S. and
Canada:
|
+1 (855) 669-9658,
replay code 3359
|
All other
callers:
|
+1 (412) 317-0088,
replay code 3359
|
About SSR Mining
SSR Mining Inc. is a Canadian-based precious metals producer
with three operations, including the Marigold mine in Nevada, U.S., the Seabee Gold Operation in
Saskatchewan, Canada and the
75%-owned and operated Puna Operations joint venture in Jujuy,
Argentina. We also have two
feasibility stage projects and a portfolio of exploration
properties in North and South
America. We are committed to delivering safe production
through relentless emphasis on Operational Excellence. We are also
focused on growing production and Mineral Reserves through the
exploration and acquisition of assets for accretive growth, while
maintaining financial strength.
For further information contact:
W. John DeCooman, Jr.
Senior Vice President, Business Development and Strategy
SSR Mining Inc.
Vancouver, BC
Toll free: +1 (888) 338-0046
All others: +1 (604) 689-3846
E-Mail: invest@ssrmining.com
To receive SSR Mining's news releases by e-mail, please
register using the SSR Mining website at www.ssrmining.com.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains forward-looking information within
the meaning of Canadian securities laws and forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 (collectively, "forward-looking
statements") concerning the anticipated developments in our
operations in future periods, and other events or conditions that
may occur or exist in the future. All statements, other than
statements of historical fact, are forward-looking
statements.
Generally, forward-looking statements can be identified by
the use of words or phrases such as "expects," "anticipates,"
"plans," "projects," "estimates," "assumes," "intends," "strategy,"
"goals," "objectives," "potential," "believes," or variations
thereof, or stating that certain actions, events or results "may,"
"could," "would," "might" or "will" be taken, occur or be achieved,
or the negative of any of these terms or similar expressions. The
forward-looking statements in this news release relate to, among
other things: future production of gold, silver and other metals;
improvements to cash costs per payable ounce of gold, silver and
other metals sold; the prices of gold, silver and other metals;
future successful development of our projects; the sufficiency of
our current working capital, anticipated operating cash flow or our
ability to raise necessary funds; estimated production rates for
gold, silver and other metals produced by us; our ability to
discover and increase Mineral Resources, replace and increase
Mineral Reserves, convert Mineral Resources to Mineral Reserves and
convert Inferred Mineral Resources to Indicated Mineral Resources
at the Marigold mine and the Seabee Gold Operation, including (a)
converting Mineral Resources and adding Mineral Reserves at Red Dot
at year-end 2019 and increasing Mineral Resources and Mineral
Reserves at the Marigold mine at year-end 2019 and (b) increasing
Mineral Resources at Santoy Gap Hanging Wall at the Seabee Gold
Operation at year-end 2019; expected timing for our exploration
program at the Trenton Canyon property in the third quarter of
2019; our expected drill programs at the Marigold mine and the
Seabee Gold Operation; estimated mine life, including anticipated
extension of the mine life of the Marigold mine into the early
2030's, without requiring expansion of mining fleet or the
associated expansion capital; timing of production at the Marigold
mine, the Seabee Gold Operation and Puna Operations; expected
increase in mill throughput at the Seabee Gold Operation in the
second half of 2019; timing and focus of our exploration and
development programs, expected timing of completion of construction
milestones at Chinchillas project, including the expectation that
the Chinchillas project will remain on budget; ongoing or future
development plans and capital replacement, improvement or
remediation programs; expected timing of closing the acquisition of
the remaining 25% of Puna Operations from Golden Arrow; the
estimates of expected or anticipated economic returns from our
mining projects, including future sales of metals, concentrates or
other products produced by us; our ability to achieve our
production guidance; and our plans and expectations for our
properties and operations.
These forward-looking statements are subject to a variety of
known and unknown risks, uncertainties and other factors that could
cause actual events or results to differ from those expressed or
implied, including, without limitation, the following: uncertainty
of production, development plans and cost estimates for the
Marigold mine, the Seabee Gold Operation, Puna Operations and our
projects; our ability to replace Mineral Reserves; commodity price
fluctuations; political or economic instability and unexpected
regulatory changes; currency fluctuations; the possibility of
future losses; general economic conditions; counterparty and market
risks related to the sale of our concentrates and metals;
uncertainty in the accuracy of Mineral Reserves and Mineral
Resources estimates and in our ability to extract mineralization
profitably; differences in U.S. and Canadian practices for
reporting Mineral Reserves and Mineral Resources; lack of suitable
infrastructure or damage to existing infrastructure; future
development risks, including start-up delays and cost overruns; our
ability to obtain adequate financing for further exploration and
development programs and opportunities; uncertainty in acquiring
additional commercially mineable mineral rights; delays in
obtaining or failure to obtain governmental permits, or
non-compliance with our permits; our ability to attract and retain
qualified personnel and management; the impact of governmental
regulations, including health, safety and environmental
regulations, including increased costs and restrictions on
operations due to compliance with such regulations; unpredictable
risks and hazards related to the development and operation of a
mine or mineral property that are beyond our control; reclamation
and closure requirements for our mineral properties; potential
labour unrest, including labour actions by our unionized employees
at Puna Operations; indigenous peoples' title claims and rights to
consultation and accommodation may affect our existing operations
as well as development projects and future acquisitions; certain
transportation risks that could have a negative impact on our
ability to operate; assessments by taxation authorities in multiple
jurisdictions; recoverability of value added tax and significant
delays in the collection process in Argentina; claims and legal proceedings,
including adverse rulings in litigation against us and/or our
directors or officers; compliance with anti-corruption laws and
internal controls, and increased regulatory compliance costs;
complying with emerging climate change regulations and the impact
of climate change; fully realizing our interest in deferred
consideration received in connection with recent divestitures;
fully realizing the value of our shareholdings in our marketable
securities, due to changes in price, liquidity or disposal cost of
such marketable securities; uncertainties related to title to our
mineral properties and the ability to obtain surface rights; the
sufficiency of our insurance coverage; civil disobedience in the
countries where our mineral properties are located; operational
safety and security risks; actions required to be taken by us under
human rights law; competition in the mining industry for mineral
properties; our ability to complete and successfully integrate an
announced acquisition; reputation loss resulting in decreased
investor confidence, increased challenges in developing and
maintaining community relations and an impediment to our overall
ability to advance our projects; risks normally associated with the
conduct of joint ventures; an event of default under our
convertible notes may significantly reduce our liquidity and
adversely affect our business; failure to meet covenants under our
senior secured revolving credit facility; information systems
security threats; conflicts of interest that could arise from
certain of our directors' and officers' involvement with other
natural resource companies; other risks related to our common
shares; and those other various risks and uncertainties identified
under the heading "Risk Factors" in our most recent Annual
Information Form filed with the Canadian securities regulatory
authorities and included in our most recent Annual Report on Form
40-F filed with the U.S. Securities and Exchange Commission
("SEC").
This list is not exhaustive of the factors that may affect
any of our forward-looking statements. Our forward-looking
statements are based on what our management currently considers to
be reasonable assumptions, beliefs, expectations and opinions based
on the information currently available to it. Assumptions have been
made regarding, among other things, our ability to carry on our
exploration and development activities, our ability to meet our
obligations under our property agreements, the timing and results
of drilling programs, the discovery of Mineral Resources and
Mineral Reserves on our mineral properties, the timely receipt of
required approvals and permits, including those approvals and
permits required for successful project permitting, construction
and operation of our projects, the price of the metals we produce,
the costs of operating and exploration expenditures, our ability to
operate in a safe, efficient and effective manner, our ability to
obtain financing as and when required and on reasonable terms, our
ability to continue operating the Marigold mine, the Seabee Gold
Operation and Puna Operations, dilution and mining recovery
assumptions, assumptions regarding stockpiles, the success of
mining, processing, exploration and development activities, the
accuracy of geological, mining and metallurgical estimates, no
significant unanticipated operational or technical difficulties,
maintaining good relations with the communities surrounding the
Marigold mine, the Seabee Gold Operation and Puna Operations, no
significant events or changes relating to regulatory,
environmental, health and safety matters, certain tax matters and
no significant and continuing adverse changes in general economic
conditions or conditions in the financial markets (including
commodity prices, foreign exchange rates and inflation rates). You
are cautioned that the foregoing list is not exhaustive of all
factors and assumptions which may have been used. We cannot assure
you that actual events, performance or results will be consistent
with these forward-looking statements, and management's assumptions
may prove to be incorrect. Our forward-looking statements reflect
current expectations regarding future events and operating
performance and speak only as of the date hereof and we do not
assume any obligation to update forward-looking statements if
circumstances or management's beliefs, expectations or opinions
should change other than as required by applicable law. For the
reasons set forth above, you should not place undue reliance on
forward-looking statements.
Cautionary Note to U.S. Investors
This news release includes Mineral Reserves and Mineral
Resources classification terms that comply with reporting standards
in Canada and the Mineral Reserves
and the Mineral Resources estimates are made in accordance with NI
43-101. NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning
mineral projects. These standards differ significantly from the
requirements of the SEC set out in SEC Industry Guide 7.
Consequently, Mineral Reserves and Mineral Resources information
included in this news release is not comparable to similar
information that would generally be disclosed by domestic U.S.
reporting companies subject to the reporting and disclosure
requirements of the SEC. Under SEC standards, mineralization may
not be classified as a "reserve" unless the determination has been
made that the mineralization could be economically produced or
extracted at the time the reserve determination is made. In
addition, the SEC's disclosure standards normally do not permit the
inclusion of information concerning "Measured Mineral Resources,"
"Indicated Mineral Resources" or "Inferred Mineral Resources" or
other descriptions of the amount of mineralization in mineral
deposits that do not constitute "reserves" by U.S. standards in
documents filed with the SEC. U.S. investors should understand that
"Inferred Mineral Resources" have a great amount of uncertainty as
to their existence and great uncertainty as to their economic and
legal feasibility. Moreover, the requirements of NI 43-101 for
identification of "reserves" are also not the same as those of the
SEC, and reserves reported by us in compliance with NI 43-101 may
not qualify as "reserves" under SEC standards. Accordingly,
information concerning mineral deposits set forth herein may not be
comparable with information made public by companies that report in
accordance with U.S. standards.
Cautionary Note Regarding Non-GAAP Measures
This news release includes certain terms or performance
measures commonly used in the mining industry that are not defined
under International Financial Reporting Standards ("IFRS"),
including cash costs and AISC per payable ounce of precious metals
sold, realized metal prices, adjusted attributable income before
tax, adjusted basic attributable net income, adjusted attributable
income per share and working capital. Non-GAAP financial measures
do not have any standardized meaning prescribed under IFRS and,
therefore, they may not be comparable to similar measures reported
by other companies. We believe that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate our performance. The data presented is
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These non-GAAP
measures should be read in conjunction with our consolidated
financial statements. Readers should refer to "Non-GAAP and
Additional GAAP Financial Measures" in Section 8 of our MD&A,
available under our corporate profile at www.sedar.com or on our
website at www.ssrmining.com, for a more detailed discussion of how
we calculate such measures and for a reconciliation of such
measures to IFRS terms.
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SOURCE SSR Mining Inc.