SSR Mining Inc. (SSRM) Earnings Call Transcript & Summary

Hello, everyone, and welcome to SSR Mining's Fourth Quarter and Year-end 2024 Conference Call. Please be advised that this call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

Thank you, operator, and hello, everyone. Thank you for joining today's conference call to discuss SSR Mining's fourth quarter and full year financial results. Our consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. There is an online webcast accompanying this call, and you will find the information to access the webcast in this afternoon's news release and on our corporate website. Please note that all figures discussed during the call are in U.S. dollars unless otherwise indicated. Today's discussion will include forward-looking statements. So please read the disclosures in the relevant documents. Additionally, we refer to non-GAAP financial measures during our discussion and in the accompanying slides. Please see our press release for information about the comparable GAAP measures. Rod Antal, Executive Chairman, will be joined by Michael Sparks, Chief Financial Officer; and Bill MacNevin, EVP, Operations and Sustainability on today's call. I will now turn the line over to Rod.

Thanks, Alex. I want to start today's call by acknowledging that February 13 marked the 1-year anniversary of the tragic incident at Çöpler. An emotional memorial service was held at site to reflect on the 9 lost colleagues. This incident has left an indelible mark on all of us here at SSR, and I want to acknowledge the hard work and dedication demonstrated by everyone across this entire organization in 2024. We have made good progress at Çöpler, especially in recent months. Constructive discussions continue with the relevant Turkish authorities on a pathway to advance the restart of the operations. Bill will provide further update on the current activities at Çöpler of later in the call. Now looking at our results for 2024. I'm pleased to report that we closed the year on a strong note with solid operating results, a year-over-year increase to our consolidated reserves and a major strategic announcement with the acquisition of Cripple Creek & Victor mine from Newmont. As a result, CC&V will increase our scale, free cash flow and portfolio diversification, and we have made excellent progress on the integration planning since announcing the transaction in December. Our consolidated 2025 cost and production guidance, including CC&V will be released shortly after the transaction closes in the coming weeks. Looking forward and as we progress our efforts at Çöpler we have several important priorities and catalysts on the horizon in 2025. These include the delivery of a technical report and updated life of mine plan for CC&V, advancing Hod Maden towards a construction decision, continued progress on an updated and extended life of mine for Puna, including potential laybacks into tiers and evaluation of a longer-term potential of Cortaderas. Advancing the Buffalo Valley deposit at Marigold, which now hosts more than 500,000 ounces in its maiden reserve, ongoing exploration activities across the portfolio as we evaluate other opportunities for mine life extension at each one of the operations, and most importantly, continuing to advance Çöpler to a restart. I also want to highlight 2 significant milestones achieved by SSR team in 2024. At Marigold, we celebrated 5 million ounces of life of mine gold production from the asset on December 30, a huge accomplishment and a testament to the quality of the mine and the team. Additionally, Puna produced 10.5 million ounces of silver in 2024, which is a record for the operation's 15 years life and hitting the top end of its previously increased production guidance. We are proud of our team in Argentina for their efforts in building Puna into one of the premier silver mines. Let's turn to Slide 4 for a discussion on the MRMR update. Our consolidated reserves totaled 8 million gold equivalent ounces at the end of '24 excluding any contributions from CC&V or Hod Maden. This was a 3% increase over '23 after mine depletion, which is a strong result that showcases the success of our resource development drilling. Notably, Marigold's reserves increased 14% year-over-year, driven by the declaration of a 523,000-ounce maiden reserve for Buffalo Valley, which will be a key life of mine extension opportunity for Marigold going forward. It is also worth noting that metal price changes were not a material driver in this reserve growth. Gold price assumptions at Çöpler and Seabee was unchanged from 2023, while Marigold and Puna increased their metal price assumptions by just 3% over the prior year. Our gold equivalent resources exclusive of reserves were down just 1% year-over-year despite the strong reserve conversion and unchanged metal price assumptions. Gold-only M&I resources increased 9% over '23, driven in part by continued resource additions at Seabee. Further, the addition of both Hod Maden and CC&V will deliver meaningful reserve and resource growth in 2025, and we will continue advancing resource development activities across the portfolio as we strive to extend mine lives at each one of the producing assets. This includes the progress at Marigold's New Millennium and Buffalo Valley deposits, Seabee's Porky's target and at Puna, the Cortaderas project. Now I'm going to hand the call over to Michael to discuss the quarter on Slide #5.

Thanks, Rod, and good afternoon, everyone. The fourth quarter of 2024 was our strongest of the year with 124,000 gold equivalent ounces produced at all-in sustaining costs of $18.57 per ounce. For the full year, we produced 399,000 gold equivalent ounces at AISC of $18.78 per ounce. Production of Marigold, Seabee and Puna combined to produce 371,000 gold equivalent ounces in 2024 at an AISC of $15.42 per ounce. As a reminder, under U.S. GAAP, we do not adjust for care and maintenance costs incurred during the year and the cash impact of these expenses are reflected in our AISC numbers. Excluding the approximately $178 per ounce of cash care and maintenance costs incurred at Çöpler and Seabee in Q4, AISC for the quarter was $1,679 per ounce. For the full year, excluding care and maintenance costs, AISC was $1,699 per ounce. At Çöpler, full year reclamation and remediation spend was $128 million. We also spent approximately $14 million advancing Hod Maden in the fourth quarter, bringing full year spend at the project to $42 million as we progressed engineering and preliminary site development activities. Lastly, as Rod mentioned, we had a good year at the drill bit in 2024 and look forward to continued advancement of these brownfield opportunities in 2025. Moving to our financial results on Slide 6. We recorded attributable net income of $0.03 per diluted share in the fourth quarter and adjusted net income of $0.10 per diluted share. Care and maintenance cost at Çöpler which totaled $36 million in the fourth quarter, accounts for $0.18 per diluted share. Fourth quarter operating cash flow was $95 million and free cash flow was $56 million, a very strong result to close out 2024. We finished the year with $388 million in total cash, a net cash position of $158 million and total liquidity of approximately $890 million. With this existing liquidity and an outlook for continued free cash flow generation in 2025, we have closed the year in a strong position financially, and we are well positioned to manage remediation costs at Çöpler as well as our reinvestment needs across the business. Furthermore, we expect CC&V will contribute immediate free cash flow to our business upon integration, enabling a rapid payback of the transaction's $100 million upfront consideration, particularly at these gold prices. Now over to Bill for Slide 8.

Thanks, Michael. I'll start with a brief update on Çöpler. In the fourth quarter of 2024, we continued to advance reclamation and remediation activities at site, and we have now removed all of the displaced heap leach material from the Sabirli Valley. We are continuing discussions with Turkish government officials around the final remediation plan at Çöpler. Positively, we continue to note public commentary from Turkish officials affirming that there was no recordable contamination to local soil, water or air in location samples. Following the incident, we commissioned Call & Nicholas, Inc., or CNI, an international mining consultant firm to conduct an independent review of the Çöpler heap leach failure. This was an important body of work for us as we sought to determine the cause of the Çöpler incident. CNI determined the most likely cause of the Çöpler incident was a deep-rooted flaw in the third-party engineering design of the heap leach pad, namely an overestimation of the shear strength properties of the liner system at the base of heap leach. This error inflated the calculated factor of safety and resulted in insufficient shear strength along the liner interface to support the as-designed heap leach facility. CNI also determined that in all material aspects, the heap leach pad construction and operation was carried out in conformance with the issued-for-construction engineered design parameters and that there was no substantiation that excess water, ground vibrations from blasting or stacking beyond the design caused the event. These outcomes provide clarity and understanding for our team on the ground as we seek to restart the Çöpler mine, and we continue to work closely with relevant authorities on this front. As a reminder, we expect Çöpler could be restarted within 20 days from receipt of the necessary permits, with initial operations consisting of processing a combination of stockpiled ore and ore mine from Çakmaktepe whilst the remediation work continues. Now let's move on to Slide 8 for some commentary on Marigold. Marigold produced 60,000 ounces in the fourth quarter, its strongest period of the year and marking 5 million ounces of total production over the mine's 35-year operating life. This is a significant milestone for any gold mine and is a clear testament to the quality of the people we have on the ground in Nevada. For the full year, Marigold produced 160,000 ounces at ASIC of $1,711 per ounce, with costs reflecting increased royalty expenses given the current gold price and also continued cost pressures with respect to OEM components. We expect these costs to remain elevated in 2025. As Rob noted in the MRMR update, we made some great progress with brownfield exploration and studies at Buffalo Valley, enabling the declaration of a 523,000-ounce maiden mineral reserve at the deposit. We also delivered mineral resource growth at New Millennium, and we'll continue to advance brand fill drilling activity at Marigold in 2025 to build on these positive outcomes. Now on to Seabee on Slide 9. Operations restarted Seabee on October 11, and the mine closed the year with its strongest quarter of 2024, with production of 28,000 ounces at an ASIC of $1,214 per ounce. This strong production was driven by higher-than-expected head grade which averaged 9.7 grams per tonne in the quarter. Thanks to the strong fourth quarter, Seabee finished the year above its previously revised production guidance with 79,000 ounces ASIC -- at an ASIC of $1,515 per ounce. The team continued evaluating the drilling at the Porky and Porky West targets in 2024, which helped deliver an 88% increase in measured and indicated mineral resources for Seabee. We're advancing further drilling and technical studies to better delineate the opportunity to potentially extend the operating life at Seabee through both additional mineralization at Santoy and a potential new development pathway at Porky targets. Now on to Puna. Puna produced 3 million ounces of silver in the fourth quarter, driving record full year production of 10.5 million ounces of silver. This production met the top end of Puna's previously increased guidance, bringing a strong close to a truly exceptional year for the operation. Full year ASIC at Puna was $15.56 per ounce, delivering significant free cash flow margins in the current silver price environment. We made good progress evaluating life extension opportunities to Puna in '24, including at both Chinchillas pit and Cortaderas target. We expect to be in a position to provide further updates on these initiatives within 2025 and are excited to be in a position to build on Puna's recent success by delivering a longer mine life and continued economic benefits for our local stakeholders. Before I turn back to Rod, I would quickly speak to the Cripple Creek & Victor acquisition. I've personally overseen the integration process since we ended the transaction in December, and I'm confident we'll are positioned to realize significant value from CC&V right out of the gate. Our due diligence identified meaningful opportunities to build on the sizable mineral reserves and resources that already exist at the asset. And we look forward to demonstrating other opportunities to deliver additional value from the asset in an updated life of mine plan for CC&V within 2025. I'm thrilled to bring an asset and team of this caliber into our portfolio and look forward to discussing our long-term plans for the mine in the near future. I'll turn it back to Rob for closing remarks.

Well, thank you, Bill, and thanks, Michael. When I closed this call at the end of the third quarter, I noted that we were looking forward to a strong close in 2024. I'm happy to say that we delivered on those expectations and we look forward to continuing this positive momentum by delivering a number of catalysts in 2025. With the CC&V transaction closing in the coming weeks, we have added another long-lived and free cash flow generative asset to our portfolio, and we look forward to sharing our consolidated production and cost outlook for the company before the end of the quarter. At the same time, we continue to diligently advance towards a potential restart of operations at Çöpler. Çöpler is a meaningful contributor to the local and national economies in Türkiye, and we are keen to return to operations, while we continue the remediation and reclamation efforts in '25 and beyond. I'm proud of the tremendous resilience of our teams and the business -- the business demonstrated in 2024. We have entered a new year with renewed optimism, and while we have a busy year ahead, we look forward to servicing value across all of our assets in 2025. So with that, I'm going to turn the call over to operator for questions. Thank you.

[Operator Instructions] And your first question today will come from Ovais Habib with Scotiabank.

Just a couple of questions from me. Just starting off with Seabee. Obviously, you had a great quarter in Q4. Should we expect any sort of outperformance like this to continue into 2025? .

Ovais, I'm going to let Bill take that one.

Yes. Thanks for the question. It was a great quarter. We obviously hit some very, very special grade. We continue to search and do further exploration in Santoy. I cannot expect those grades to continue each and every other -- every quarter, but we do expect to continue along that same vein year in, year out. But we -- as you know, if you've been tracking Seabee, there's times where we hit some of that better grade and this quarter was definitely one of them.

Okay. And just then moving to Çöpler. Rod, just in terms of -- is there any sort of key information or study the regulators are waiting for before they make any sort of decision on moving forward with the restart of operations? Or was the recent findings of CNI enough for the regulators to make their decision to move forward?

Yes. Look, I think the simple way to think about it, Ovais, it's a package of work. If you think about in the year that we've had since the incident, we've made tremendous progress as we've been continually reporting all through 2024 and obviously, now with our full year financials. And the priorities that we set ourselves and the aggressive timetable that we set ourselves to achieve what we've actually done in terms of control the site, ensure we didn't have any environmental contamination to remediating clearer Sabirli Valley to make this site safe are all sort of precursors to a restart as you would expect. Similarly, the CNI report itself, obviously, isn't a precursor, but it's important to understand as we're talking and working with the regulators. And the last few pieces are really around locking down and agreeing on what the closure plans will be. And that is in respect to the East Storage facility that Bill mentioned. So that's concluding now as well as the final heap leach closure itself. So it's all been a package, if you like, as a progression to where we are today to get us into this place as we're looking forward to a restart. We've still got work to do as similarly as we always will. Remediation efforts will continue beyond even when Çöpler restarts, as we've talked about before, et cetera, et cetera. So restart doesn't necessarily mean there's not more work to be done. But I think as I think back to where we were this time last year, where clearly, we're all shocked about what happened and to where we are now, we've come a long ways. And obviously, we're working confidently with the regulators to seek a permission and permits to get restarted at Çöpler.

And then just kind of number 3 on my end. Again, in terms of moving on to Hod Maden, does the commencement of the development of Hod Maden hinge anyway on the restart of operations at Çöpler?

Yes. I think the simple way to think about it, Ovais, we may have talked about it before. When we acquired our interest in Hod Maden, we indeed talk about the fact that we wanted to take the time to develop a plan. And when I say a plan, a technical study that represents our approach to developing the asset with the necessary detail around the execution plan, the necessary technical detail, particularly in the sort of years 1, 2, 3 after you start the asset up to get a high level of fidelity around what we expect in the asset in the initial years because that's clearly where the payback is, et cetera, et cetera, et cetera. So that work has been working -- going on in the background, and we're studiously working on all those components, exclusive of Çöpler. So -- and that work will continue during this year until we're in such a stage where we can wrap all that up to basically redo the technical reports and then start the project financing discussions externally with the banks to bring Hod Maden into construction. So it's not hinged on Çöpler. And in fact, the work we've been doing and the way we've separated the teams and the efforts around the teams is set up to be mutually exclusive.

Perfect. Looking forward to the guidance after the closing of CC&V.

Great. Thanks, Ovais. Appreciate it.

Your next question today will come from Cosmos Chiu with CIBC.

Maybe my first question is on Marigold. Good to see that you have declared an initial reserve at Buffalo Valley. Could you remind me in terms of how that slots into the production profile of Marigold?

Yes. Look, I'll let Bill answer the question. But I think what what's important, I think for most people to take away from the year, there could have been a period where we may have forgotten about the rest of the business. But the fact that we're able to achieve what we achieved with the challenge of Çöpler in respect to the operations performing as well as continuing to evolve and daylight the growth from the portfolio. I'm really proud of the team and what they've been able to do. And I want to make that declaration very public because we sort of forget, right? We just take it as -- I think, as for granted. But the efforts in the background to bring a Buffalo Valley now into a reserve shouldn't go unnoticed because it is important for the future of Marigold. And again, another really good indication of the focus that we've had and energy that we've got in the business. But Bill, why don't you answer the question around the sort of timing?

Yes. So Cosmos, it's -- we're very excited about it. It's like a satellite of that main area. There was a lot of good work done already, working it through this year. We're taking that further into feasibility study-type work with a lot of engineering, and we'll be updating our life of mine plans as typically throughout this year. So in terms of the timing, it will be driven by 2 things: the net value, which is -- we believe is going to be high for Buffalo Valley, but we've also got to still go through the permitting processes. So it's still several years off, but it's definitely something that we're excited about is progressing through the pipeline. And we'll be able to give more color to that later in the year after we've worked through our life of mine scheduling processes.

Great. And echoing your comments, Rod, and that's why I wanted to ask that question in terms of -- I'm pleasantly surprised as well that we're able to see progress at some of these different assets, including Buffalo Valley. So I agree with what you said, Rod.

Yes, I appreciate it. Because I think the other thing -- just 1 more thing on Marigold, just while you're talking about. I think the other area of focus for us in '25 beyond what Bill described for Buffalo Valley, which is important, will be -- keep on putting holes into the new Millennium target, which is another one that's progressed, just not as far advanced as what Buffalo Valley is.

Yes. Great. And then as you mentioned, you put out your updated mineral reserve -- mineral resource estimate today as well for the year. And as you mentioned, you used very conservative commodity price assumptions, $1,500 for some of the assets, even lower for the other ones. Could you maybe talk about the decision to use the conservative commodity price assumptions? And what would have happened? Some of the -- like Marigold for example, I would imagine there's some ounces that could come in into the pit if you were to have used a higher commodity price assumption. So 2 parts. Why did you -- continue to use a commodity price much lower than spot prices today, and what could have happened?

Yes. Look, I'm not going to speculate on what could happen because they're all sensitive in their own right. But what I'll say is the simple reason for where we ended up, Cosmos, is, if you look at Çöpler, given the asset is on care and maintenance, we left the metal prices unchanged, it just made sense to, until we get a restart. That was really key. Seabee, as you remember, is already at $1,650 because of its relatively short mine life. So we saw -- we didn't see a reason to change it. And then the other ones increased slightly, obviously, as well. So that was the decision made as we were going through our assumptions. We also take a sort of view of consensus. We look at what our peers are doing. And that's how we ended up with the reserve and resource statements as they were. We'll continue to review that. We only do 1 sort of strategic mine plan review a year because otherwise, it just becomes unwieldy, and we'll review that during 2025. Remember, we've also got to take into account now the acquisition of CC&V. And historically, Newmont have been fairly conservative in the resource and reserve statements. We'll have to wait and see what they do with the new resource and reserve statements here in the next little while. And we'll take that into account as we look at the sort of full portfolio review strategically through our mine plan process in 2025. So there could be some updates to it as we progress into this year or later in the year. How they impact -- how the commodity prices impact the pit shells, the optimal pit shells, et cetera, they're all very differently positioned in terms of their sensitivity. So again, I'm not going to sort of go into wax lyrical about each one of them, but they will obviously have the benefit of a higher commodity price over the years. So more to come later this year.

Of course. And maybe one last question. As you mentioned, sorry, bringing this back to Çöpler here. As you mentioned, the remediation and containment costs overall $250 million to $300 million, you've spent $127-ish million so far. Could you remind us in terms of the timing of the remainder of that spend?

Yes. I'm going to let Michael to take that call but he's -- over to you, Michael.

Yes. Thanks, Cosmos. I think as you look at what Rod mentioned earlier in this call, a lot of the focus in 2024 was the Sabirli Valley, and that work has been completed. As we work for the engineering and the time line for the East Storage facility, the material movement will be subdued throughout 2025. Once that facility is constructed, then the material movement will pick back up. So I would expect that remediation and reclamation spend to be lower than it was in 2024, and as we get that permitting and other things done for the East Storage facility, we'll ramp up that material movement again.

I'll put that out with guidance, Cosmos, as best we can. The one thing I would say, too, is the -- it's an important -- you pronounce the numbers correctly in terms of the liability that we're carrying because I think it's important that people understand it. The $250 million to $300 million is still our estimate. That hasn't changed, and that's sound. And we're obviously already churned through quite a lot of that with the '24 efforts. So the expectation is the rest of the spend will take place over a number of years beyond 2025 as we progressively build the East Storage facility and the remediation efforts on the pad, as Michael said. So I think taking away from that, if you think about overlaying that on our liquidity position, we're obviously in a extremely strong position.

Your next question today will come from Lawson Winder with Bank of America Securities.

I wanted to ask about Marigold in advance of your guidance. I mean, I'm not going to ask you for a preview of the guidance, but just conceptually, Marigold a year ago was conceived to be going through a period of investment. So 2025 would have, as a result, experienced lower gold production and then a rebound in 2016 and then still higher in '27. Just generally, is that still the concept? Or could there be a push out of the investment that was considered a year ago?

Sorry, Lawson, I had to unmute. I think if you use the tech report we put out this time last year, as the placeholder for guidance, I think that's still sound. So until we do it, I think that's the best reference point.

Okay. Fantastic. And then to what extent can you provide us some additional color in terms of what Türkiye is considering as conditions for reinstatement of the operating approvals for Çöpler. So for example, is there any consideration to some increase in local ownership of part of the mine? Is there a consideration for a resubmission of a completely new EIA or what are some kind of the moving parts? Or do you have some stage gates that you can share with us just to help us kind of think about potential time lines? Anything you could share would be very helpful.

Yes. Look, I think sort of I'll repeat what I sort of said a moment ago, but if you think about the incident itself, it was unprecedented, right? So yes, there is no playbook to this in terms of what needs to be done for a restart. However, the efforts that we've made and have made in themselves is entirely in alignment to seeking a restart. So we've made terrific progress on those fronts, and we continue to make progress on those fronts. We believe we're getting to the pointy end of that work, which necessitates the completion of the engineering for the East Storage facility and the engineering around the heap leach pad remediation, which we're closing in fast to complete. And obviously, those discussions are going on in parallel with the regulators to ensure that we're doing all the things that we need to do before we seek approval for the reinstatement of the temporary operating certificate. So there's no condition precedent. There's no determinant around you have to do a new EIA. We will be operating under the 2014 EIA. And as I mentioned I think probably on the last call, no matter what, we actually had to do a new EIA for Çöpler anyway, which we fully expect to complete this year for some middle of what we'll call the Çöpler 2025 EIA. That will take into account the anticipated grown leach circuit and some of the expansion opportunities that we identified in the last tech report this time last year. And that's sort of normal course. It's obviously more important now because we want to get the higher throughput rates back up at Çöpler, but nonetheless, it was sort of more in the ordinary course for us than having to be done because of anything the regulators want. So I think, again, as we're moving forward, we're doing all the things we need to do, and we've got to just continue to deliver those and continue with our dialogue with the regulators.

That concludes the question-and-answer session as well as today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.