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

Hello, everyone, and welcome to SSR Mining's Second Quarter 2026 Conference Call. This call is being recorded. 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 second quarter 2026 financial results. Our consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR and SEDAR, and they are also available on our website. There is an online webcast accompanying this call, and you will find the information to access the webcast 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.

Great. Thanks, Alex, and good afternoon to you all. We entered the second half with momentum, having delivered operating results in line with expectations. And most importantly, we completed a meaningful strategic repositioning of SSR through our exit from Turkiye. We are well positioned to achieve full year guidance targets through higher production in the second half that will drive significant free cash flow generation through the remainder of the year. We expect all-in sustaining costs to trend to the upper end of our full year guidance ranges due to a number of factors that we'll speak to later in the call. We continue to work hard on business improvement initiatives to help mitigate pressures on costs across the company. Strategically, over the last few months, we have delivered a number of significant milestones, including the successful divestment of both 현pler and Hod Maden. The approximately $1.5 billion in cash proceeds from 현pler sale was received before the end of the second quarter, bringing our total cash position to nearly $1.8 billion with no debt. With the exit from Turkiye, SSR is now a free cash flow-focused Americas gold and silver producer anchored by our position as the third largest gold producer in the United States. Our U.S. platform alone has considerable growth potential that we look forward to showcasing moving forward. Separately, we have now reestablished our position as the capital return leader amongst our peer group, returning more than $400 million to shareholders year-to-date. This implies a nearly 8% yield before the forthcoming dividend payments and ongoing share buyback over the remainder of 2026. Our organic growth initiatives continue to advance across the portfolio as we seek to meaningfully extend mine lives at each one of our assets. As a result, and capitalizing on our significant liquidity position, we made a conscious decision to increase our growth capital expenditure for the remainder of '26. It is the right time for us to begin investment in future growth right across the business after years spent identifying and studying the opportunities. The anticipated publication of the Marigold Technical Report by year-end will begin to provide insight into some of these tangible opportunities. As you can see, our business is in an excellent position as we head into the second half. We have the best-in-class balance sheet, peer-leading capital returns program, expectations for a very strong second half of production and free cash flow and a track record of disciplined capital allocation. These traits are key differentiators for SSR amongst its peer group. Before moving on to the next slide, I want to summarize some of the catalysts ahead. First, we expect to publish an updated technical report for Marigold with the objective of capturing growth opportunities like Buffalo Valley, DG80 and New Millennium, with the purpose of extending mine life. Next, we are continuing to advance a number of exciting brownfield opportunities at both Puna and Seabee and Bill will speak to more about these in the coming slides. And third, we'll continue to execute against our capital allocation framework as announced in June, where we will maintain balance sheet strength, invest in the business and return capital to shareholders in the form of buybacks and dividends. These catalysts are just a few of the potential avenues for value creation in the years ahead. So with that in mind, let's talk more about the track record of creating value on Slide #4. With our strategy clearly defined, it is worth highlighting how we got to this point. We have clearly demonstrated a track record of meaningful value creation with growth in per-share metrics, capital returns and disciplined M&A. I've already spoken about our commitment to capital returns and particularly share buybacks, but it's also worth noting that once factoring in our reinstated dividend program and projections for ongoing share buybacks, we are tracking towards a sector-leading capital returns yield in 2026. We have a track record of value-accretive M&A, and this was most recently illustrated by the phenomenal returns generated from our acquisition of Cripple Creek and Victor. Across the portfolio, we have consistently demonstrated our ability to add value through mine life extensions and optimizations, and we expect this to continue in the future. At the same time, the numerous organic growth initiatives across all 4 of our assets create an environment where we can evaluate strategic additions to the portfolio purely on an opportunistic value-accretive basis, similar to our approach at Cripple Creek and Victor. If attractive M&A opportunities in our core jurisdictions are not present, we are confident that focusing solely on our organic portfolio will continue to evolve our multi-decade production profile. As you can see, these figures on the slide illustrate a powerful picture of discipline and value creation in how we run our business. We have seen our consensus NAV increase nearly 300% over the last 2 years, and our cash flow per share improve by 440% over that time. We intend to continue building on this impressive track record for the years to come. So now I'm going to turn it over to Michael on Slide 5 to discuss the quarterly results.

Thank you, Rod, and good afternoon, everyone. In the second quarter, we produced 102,000 gold equivalent ounces at an all-in sustaining cost of $2,622 per ounce. These results were consistent with our expectations and reflected the intentional increase in sustaining capital spend that Rod discussed. Our strong first half operating performance positions us well to achieve our full year production guidance. We do currently expect costs to be towards the upper end of our guidance range, and this reflects both higher realized fuel prices during the second quarter and a deliberate decision to advance sustaining and growth investments across the portfolio. Given the strength of our balance sheet and cash flow generation, we are taking a disciplined approach to accelerating capital where we see the potential to extend mine lives, improve operating resilience and create attractive long-term returns. These investments are not simply incremental spending. They are intended to enhance the quality, durability and value of our Americas-focused asset base. We expect sustaining capital expenditures to remain elevated in the third quarter. Production is expected to strengthen as the year progresses with approximately 55% to 60% of second half production weighted towards the fourth quarter. Turning to fuel costs. Our diesel hedging programs at Marigold and CC&V have mitigated the impact of recent price increases. However, we remain exposed to market prices for unhedged diesel purchases across the portfolio. Based on our current operating portfolio, a $10 per barrel increase in oil prices results in an estimated increase of approximately $10 per ounce in consolidated AISC in 2026. We're closely monitoring the potential secondary effects of higher fuel prices on transportation, reagents and other consumables. Our contractual arrangements and ongoing engagement with key suppliers provide visibility into emerging cost pressures and help us proactively manage potential disruptions or inflationary impacts. For context, consumables represent approximately 15% of our total cost base, while fuel generally represents between 10% to 15%. Royalties represent a further approximate 15% and naturally increase in stronger metal price environments. Bill will discuss individual operations in greater detail, but at the portfolio level, our focus remains clear: maintaining operating discipline, actively managing inflationary pressures and directing capital toward investments that strengthen margins, extending asset lives, and supporting a sustainable free cash flow generation. Now let's move to Slide 6 for a brief review of our financial results. Second quarter revenue was $443 million based on sales of 98,000 gold equivalent ounces. Average realized prices were $4,301 per gold ounce and $74.24 per silver ounce. Net income and adjusted net income were both $0.66 per diluted share. Our realized gold price was approximately 5% below the quarterly average, and this primarily reflects the timing of sales during the quarter, with a greater proportion of our second quarter ounces sold in June when gold prices were lower. Free cash flow from continuing operations was $50 million in the quarter, bringing year-to-date free cash flow to nearly $300 million, inclusive of working capital. Free cash flow before changes in working capital was $123 million in the second quarter. These amounts reflect the reclassification of H1 spend at Hod Maden into discontinued operations. As a reminder, 현pler and Hod Maden were included as discontinued operations in our financial reporting for the second quarter. The second quarter also included more than $120 million in cash tax payments. This is consistent with our normal annual payment cycle, under which approximately half of our full year cash taxes are generally paid in the second quarter, with the balance largely distributed evenly between the third and fourth quarters. Our strong cash position allowed us to continue returning meaningful capital to shareholders while preserving substantial strategic flexibility. During the quarter, we returned $338 million through the repurchase of 10.4 million shares, and we announced the reinstatement of our quarterly dividend. Share repurchases continued into the third quarter as we execute against the $500 million buyback program approved in mid-June. As of July 31, we retain capacity to repurchase approximately 8.6 million additional shares under our current normal course issuer bid, which extends through March of next year. At current valuation levels, we continue to believe that repurchasing our shares represents an attractive and accretive use of capital. During the quarter, we also received the cash proceeds from the 현pler transaction, and as a result, we ended the quarter with nearly $1.8 billion in cash, even after the significant level of share repurchase completed during the period. Earlier today, we announced the completion of an amendment and extension of our revolving credit facility. This facility was increased from $400 million to $600 million with a renewed 4-year term and included a 25 basis point improvement in borrowing rates as compared to the prior facility. Overall, the second quarter demonstrated the strength of the business, solid operating execution, substantial free cash flow generation, disciplined investment in our assets and significant capital returns to shareholders. With a strong balance sheet, a more focused portfolio and several opportunities to enhance long-term asset value, we are well positioned for the remainder of the year and beyond. Now over to Bill on Slide 7 to talk about the operations.

Thanks, Michael. I'll first start with the HSS. Working with all of our stakeholders is foundational for our business. This is highlighted through one of SSR Mining's 3 core values: being better together. Today, I would like to share a methodology we have implemented to improve how we work with our host communities. At each of our operations, we have established community development committees. These committees have members from local communities who participate in both the build and selection of which support and local business enabling projects are implemented. Through the committee members' contributions and efforts, we are improving the quality of both where and how we support our local communities. Now on to Slide 8 to start with Marigold. In the second quarter, Marigold produced 31,000 ounces, bringing year-to-date production to 69,000 ounces and reflecting our original forecast for a strong H2-weighted profile in 2026. We expect second half production will be approximately 65% weighted to the fourth quarter. Marigold remains on track for its full year production guidance of 170,000 to 200,000 ounces. AISC in the second quarter reflected higher sustaining capital spend as previously guided. Sustaining CapEx will remain elevated in the third quarter due to the timing of spend on fleet replacements and upgrades. We have also increased our growth capital guidance at Marigold from $48 million to $65 million as we accelerate spend to facilitate longer-term growth initiatives at the site. We expect full year AISC at the top end of guidance, reflecting the increased sustaining capital as well as the impact of higher fuel prices on the unhedged portion of our diesel usage. As noted, we plan to have an updated technical report and life of mine plan for Marigold out later this year. This new life of mine plan has potential to demonstrate a meaningful extension against 2024 TRS while incorporating the increased blending requirements as noted earlier this year. As previously guided, while this will result in changes to the annual production profile at Marigold, we continue to expect total ounces produced over the next 5 years to be comparable to the 2024 TRS and then include meaningful life extension thereafter. A lot of hard work has gone into this updated life of mine plan, and we look forward to updating the market later this year. Additionally, we have continued to advance exploration and analysis of numerous other targets across the broader Marigold property to support additional mine life extension and growth opportunities in the future. Marigold has been in operation for more than 38 years, and we are confident there is a very long future still ahead for the operation. Now on to Slide 9 for an update on CC&V. In the second quarter, CC&V produced 28,000 ounces at an AISC of $1,995 per ounce, bringing first half production to 66,000 ounces and well on track for our full year guidance for 125,000 to 150,000 ounces. Second half production is expected to be 50% to 55% weighted to the fourth quarter. AISC is trending towards the top end of full year range due to fuel costs and a modest increase in sustaining capital on equipment components and general site improvement initiatives. Growth capital has also been modestly increased as we accelerate the timing of spend on the expansion of VLF2. Overall, CC&V continues to perform very well against expectations and has clearly established itself as a cornerstone asset in our portfolio. The currently in-progress Amendment 14 is advancing as we continue to expect final approvals before the end of 2027. Work to evaluate opportunities to improve the longer-term production profile, including the potential for future mineral reserve conversion, remains ongoing. Now on to Slide 10 to discuss operations at Seabee. Seabee produced nearly 17,000 ounces in the second quarter at an AISC of $2,358 per ounce. Year-to-date production is 23,000 ounces as we focus on underground development in the first half of the year. For the full year, Seabee continues to track to the lower end of full year guidance, and we expect higher grades will drive the strongest production in the fourth quarter. Full year AISC at Seabee is also expected at the top end of guidance and our 2026 growth capital forecast has been increased from $15 million to $35 million as we advance the Porky West project in the second half of the year. Porky has the potential to extend the mine life at Seabee well into the next decade, and we're also progressing near-mine drilling at Santoy as we seek to extend operations at the deposit. On to Puna on Slide 11. In the second quarter, Puna produced 1.7 million ounces of silver at an AISC of $29.52 per ounce. Over the first 6 months of the year, Puna has produced 3.4 million ounces. Second half production at Puna is expected to be relatively evenly split between the third and fourth quarters, while full year AISC are trending to the higher end of guidance as a result of inflationary pressures in Argentina. Our teams continue to evaluate the numerous pathways to growth at Puna, including additional laybacks at Chinchillas, evaluation of the Melina open pit target adjacent to Chinchillas and continued advancement of the Cortaderas project. Now on to Slide 12 for a review of the growth pipeline. As I've noted through this call, all 4 of our operations have a clear growth trajectory with the potential to meaningfully extend current mine lives and sustain our current production profile for many years to come. We're in an enviable position on this front and as noted, our significant liquidity position has enabled us to advance growth capital spend at each project to support timely delivery of each project's development. With respect to the rest of our organic growth portfolio, we're advancing early-stage opportunities across each of our core jurisdictions. This includes continued evaluation of the Amisk project in Saskatchewan, where we are progressing internal economic studies to better understand the project's long-term potential. Regional exploration is also continuing across the province. In the U.S., early-stage field programs are underway at multiple exploration targets in Nevada. In the second quarter, we also finalized a strategic investment in Phenom Resources, who hold the Dobbin project in Nevada. Dobbin is a Carlin-style target with more than 2-kilometer-long gold-in-soil anomaly and limited historical exploration. The first drilling ever undertaken on the property commenced early in the third quarter. We currently own 9.9% of Phenom and hold an option to earn in a minority ownership in the property through $4 million in exploration spend. As you see, there's plenty underway across the portfolio, and we look forward to providing updates on these growth initiatives in due course. Now I'll turn back to Rod for closing remarks.

Great. Thanks, Michael. Thanks, Bill. The first 6 months have already delivered a transformational inflection point for SSR. We enter the second half in an excellent position where we expect strong production and free cash flow into the year-end. Our capital allocation and returns approach has now been fully implemented through the investment in growth, as well as returning capital to shareholders through both share buybacks and reinstated dividend program. So with that, I'm going to turn the call over to the operator for any questions you may have. Thanks, everyone.

[Operator Instructions] The first question comes from George Eadie with UBS.

Maybe Bill and Rod, starting at Marigold. If I go back to the original target was around 22 million tonnes stacked at 0.4 gram a tonne. You're at 9.3 and 0.7 gram a tonne now. Can you maybe help us with how many tonnes you need to stack in the second half, or at least what grade to get to the lower end, just to sort of better understand how that's trending?

Sure, George. Hi, how are you? I'm going to hand it over to Bill.

Yes, George, we've resequenced some of our mining in this previous quarter, but we're still on track to reach our projection for the year and be at the lower end of the guidance as suggested.

What's the -- what roughly is the leach time here? Like if you were to throw, just for simplicity's sake, 0.5 gram a tonne on the pads today, when would that be leached out the other side roughly?

Our leaching extends between 90 and 120 days. George, it would mostly fit at that 90-day time frame.

Okay. So stuff you're throwing today, is that a quarter? Okay. That's helpful. Maybe just, sorry, changing to CC&V as well if I can quickly. In the 10-Q, there's a declaratory judgment there at discharge permit at Carlton Tunnel. Can you maybe help me understand that and remind us what the story is with that?

Yes, George, it's Michael. So with regards to Carlton Tunnel, if you remember, when we did the agreement with Newmont, we worked out that we would put together the long-term mine closure plans and then there would be an economic sharing of those costs. That work is ongoing. It was already underway when we purchased the asset, and that continues on throughout that work that's going with the regulators, as well as the guys at the site. Amendment 14, as Bill talked about, which is the next phase of growth that takes us into 2030, that is on track, and we expect to get that sometime by the end of 2027, as he mentioned.

Yes. I was more mentioning the comments on March 9 around the parent co with a federal court lawsuit on the water quality. Like, maybe remind what that is, Michael, or maybe I'm just overreacting to kind of what that is.

Sorry, George, it's Rod. I'll dive in more specifically. I think Michael gave you a good overview. There's multiple parts to the way this was structured with the deal for Newmont. I think that's what Michael was outlining. With respect to that point specifically, it's really a Newmont-driven approach to the legal case with respect to the Carlton Tunnel discharge and the permits around the discharge and what's been required around it. And as Michael mentioned, I think the important part, it was already in train. And while Newmont are controlling that piece of the previous permitting cycle that we're going through, the overall picture for us won't change for any liabilities for SSR in the future, whether that's successful or unsuccessful as we go on. So it's something that Newmont are controlling. We don't have any carriage in that court case.

So in summary though, like from your guys' view, it's not a big issue or risk really for SSR at all, it sounds.

No, look, ultimately I think it'll all help define what the long-term requirements are for mine closure at Cripple Creek, so it's obviously important, but in terms of how the deal has been structured for us, we're protected.

The next question comes from Larry Liu with CIBC.

I guess I'll kick off my first question asking about Phenom Resources. Can you kindly share with us what kind of opportunities you're seeing over there? And should we expect this to be the kind of deal SSR Mining involves in, taking rather a strategic investment approach rather than acquiring companies or assets completely?

Larry, look, it's an interesting option for us as we looked at the opportunity, and we identified this through our guys on the ground in Nevada. But it's very early stage. The fact was that this piece of land was tied up in the forestry land that wasn't available for exploration for the longest time. It became available. Phenom themselves were able to then peg it out and start an exploration program. And what we saw in some of the early stages of that was interesting for us to enter the way we did at both the corporate level and at the asset level itself. So it's still very early. Drilling's really only getting underway. Phenom themselves will lead the charge on the continuous disclosure and whatever else as time goes on. But clearly an opportunity for us to participate in something that we think is very interesting. Yes, to answer your question from a perspective how we look at other strategic options. We make no secret of this over time, that we look from everything from the types of earning structures that we've got with Phenom to all the way through to asset acquisitions. It's a similar process for SSR. That won't change despite, I think people were speculating or worried that with the cash flow that we currently have on the balance sheet that we felt in a rush or compelled to go-to-market to do something. I think we've got a track record of discipline. We have a track record of taking our time to ensure that anything that gets to market has gone through our disciplined approach to due diligence and that won't change in the future. So we'll look at things like Phenom and other things as well.

That's a very good answer. I guess following up on that kind of topic as well is we -- you mentioned earlier, Rod, as well, it's a very opportunistic time to increase your credit revolving facility. Like, am I reading too much into it or is there a potential big use because you already have $1.8 billion in cash? How should we look at it?

Yes, look, I think it was just, it was the right time to do it. Michael and the team were able to work with our syndicate, the banks, and most importantly, I think it wasn't so much the extension and the increase from $400 million to $600 million, it was more around the terms were more favorable to us to maintain that on our balance sheet. So it's normal course for us.

Perfect. Sounds good. And if I can, I have one last question. Coming back more to the guidance for the operations itself, can you remind us what's the positive impact after your divestment of 현pler? I saw your AISC got reduced compared to previous guidance. Is that the impact from 현pler?

Yes, that's right. It's the impact of not having care and maintenance within the 현pler asset itself.

Our next question comes from Lawson Winder with Bank of America Securities.

Thank you for today's update. Also, congratulations on closing the Turkiye divestments. If I could just get your thoughts on capital allocation. On the buyback, is the roughly $70 million of repurchases in July a reasonable run rate for the balance of the year? And then just carrying that through to the end of the year, if that were the case, that would bring you pretty close to the $500 million approval. Is the expectation that the $500 million will ultimately be used up by year-end?

I'm going to pass that one over to Michael, Lawson.