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SSR Mining Provides Updated Full Year 2020 Outlook of 680,000 to 760,000 Gold Equivalent Ounces at AISC of $965 to $1,040 per Ounce

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SSR Mining Provides Updated Full Year 2020 Outlook of 680,000 to 760,000 Gold Equivalent Ounces at AISC of $965 to $1,040 per Ounce

 

 

 

 

 

SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) (ASX: SSR) announces updated full year 2020 outlook following the successful completion of the merger of equals transaction with Alacer Gold Corp. on September 16, 2020 and reflecting the COVID-19 related impacts to operations at Seabee and Puna. The Company expects to produce, on a consolidated basis, 680,000 to 760,000 gold equivalent ounces from its four operating mines at consolidated all-in sustaining costs of $965 to $1,040 per ounce.

 

Rod Antal, President and CEO said“The completion of the merger between SSR Mining and Alacer has created one of the premier free cash flow generators in the sector with a number of near term, value enhancing catalysts on the horizon. Despite the COVID-19 related challenges, our full year 2020 outlook demonstrates the strength and resilience of the Company’s diversified operational base. We anticipate a strong finish to the year, particularly in the fourth quarter, as Çöpler and Marigold continue to operate and deliver uninterrupted and Seabee and Puna return to normal operations. We are currently focused on completing our integration efforts and assessing our extensive growth and development portfolio. The upcoming Çöpler technical report in the fourth quarter will be the first step in this process and will begin to define our low capital intensity growth pipeline within the Çöpler District.”

 

Full Year 2020 Outlook

 

 

               
Operating Guidance (100%) (1)   Çöpler (2) Marigold Seabee Puna Other Consolidated
Gold Production koz 310 – 360 225 – 240 80 – 90 615 – 690
Silver Production Moz 4.9 – 5.3 4.9 – 5.3
Gold Equivalent Production koz 310 – 360 225 – 240 80 – 90 66 – 72 680 – 760
Cash Cost per Ounce (3) $/oz 590 – 640 810 – 860 450 – 500 11.00 – 12.50 665 – 720
Sustaining Capital

Expenditures (4)

$M 40 55 15 15 125
Capitalized Stripping /
Capitalized Development
$M 2 25 10 7 44
Sustaining Exploration
Expenditures
$M 4 4 1 9
General & Administrative (5) $M 25 – 30 25 – 30
Share Based Compensation (5) $M 20 – 25 20 – 25
All-In Sustaining Cost per
Ounce (3)
$/oz 710 – 760 1,170 – 1,230 770 – 820 15.00 – 17.00 965 – 1,040
Growth Capital Expenditures $M 40 4 6 7 57
Growth Exploration
Expenditures
$M 13 12 8 33
Total Growth Capital $M 53 12 12 6 7 90

 

   
(1) Figures may not add due to rounding.
(2) Figures are reported on a 100% basis. Çöpler is 80% owned by SSR Mining.
(3) SSR Mining reports the non-GAAP financial measures of cash costs and AISC per payable ounce of gold and silver sold to manage and evaluate operating performance at Çöpler, Marigold, Seabee and Puna. See “Cautionary Note Regarding Non-GAAP Measures”.
(4) Excludes sustaining exploration expenditures. Includes $9 million oxygen plant lease payment at Çöpler.
(5) Figures represent the actual and projected combined expenditures and accruals for both Alacer pre-acquisition and SSR Mining for full year 2020 without considering financial reporting impacts of the acquisition.

 

Based on the financial statements of each of SSR Mining and Alacer at June 30, 2020, the combined cash balances were $703 million and debt balances were $475 million.(6) Production for the second half of the year is expected to be 55% to 60% weighted towards the fourth quarter due to both Seabee and Puna ramping up operations in the third quarter following COVID-19 shutdowns, stacking of higher-grade ounces later in the year at Marigold, and higher processed grades during the fourth quarter at Çöpler in line with the mine plan.

 

________________________________
(6) Combined cash balance, a non-GAAP financial measure, is the sum of Alacer’s reported consolidated cash and cash equivalents of $241 million and SSR Mining’s reported consolidated cash and cash equivalents of $462 million both as reported in the respective company’s unaudited condensed consolidated financial statements as at June 30, 2020. Alacer’s consolidated cash excludes restricted cash of $33 million as at June 30, 2020. Combined debt balance, a non-GAAP financial measure, is the sum of Alacer’s short term and long term portion of finance facility totaling $245 million as disclosed in note 17 of Alacer’s unaudited condensed consolidated financial statements as at June 30, 2020 and SSR Mining’s 2019 convertible notes of $230 million as disclosed in note 6 of SSR Mining’s unaudited condensed consolidated financial statements as at June 30, 2020. See “Cautionary Note Regarding Non-GAAP Measures”.
     

 

In addition to the impact of higher anticipated fourth quarter production, free cash flow generation is also expected to be heavily weighted to the fourth quarter due to the timing of the following expenditures in the third quarter:

 

  • Transaction, integration and severance payments
  • Mine equipment and leach pad spend at Marigold
  • Tailings facility expansion spend at Seabee
  • Puna ore transportation truck purchases
  • Puna working capital build on concentrate inventories

 

SSR Mining will consolidate the operational and financial results of Çöpler commencing from the Alacer transaction closing date of September 16, 2020. Therefore, Çöpler will have limited contribution to SSR Mining’s third quarter financial results with full contribution commencing in the fourth quarter.

 

Combined G&A expenditures for 2020 are forecast to total $25 to $30 million. The combined share-based compensation for 2020 is forecast to total $20 to $25 million as a result of the strong share price performance.

 

Çöpler: Year-To-Date Performance and 2020 Outlook

 

Gold production from Çöpler was 167,212 ounces through June 30, 2020 at mine site AISC of $744 per ounce.

 

The 2020 Çöpler production outlook is unchanged, with gold production expected to be 310,000 to 360,000 ounces. Mine site AISC are forecast to be $710 to $760 per ounce. Mine site AISC are higher than original Alacer guidance mainly due to the impact of higher gold prices on royalty costs and the announced increase to government royalty rates in Turkey in early September 2020.

 

Sustaining capital expenditures are planned to total $40 million, which includes ongoing construction of the tailings storage facility lifts, construction of the first approximate six million tonne heap leach pad expansion, oxygen plant lease payments and for optimization work on the sulfide plant. Growth capital expenditures are planned to total $40 million, which includes capital for accelerating construction of the TSF, expected construction of the flotation plant, work on the additional approximate 20 million tonne heap leach pad expansion and for other growth initiatives, including the Çöpler District Technical Report. Capitalized stripping is expected to be $2 million for the full year. With the ongoing oxide exploration success in the district, the 2020 exploration spend is forecast to be $17 million.

 

An updated Technical Report is planned to be released in the fourth quarter of 2020. The Technical Report will include:

 

  • Ardich preliminary development plans
  • Updated performance expectations of the Çöpler sulfide plant
  • Economic and operating impact of the proposed flotation circuit
  • Opportunities for tailings storage expansion

 

Detailed engineering for the proposed flotation circuit is underway and the construction decision remains subject to final Board and other approvals once the technical work is complete. If approved, the flotation circuit commissioning is targeted in the first half of 2021. The preliminary capital estimate for the proposed flotation circuit is approximately $15 million. The flotation circuit is anticipated to increase the gold and sulfide sulfur grades processed through the autoclaves (increasing autoclave and oxygen utilization), reduce unit costs, and increase sulfide plant throughput and gold production.

 

With respect to the COVID-19 pandemic, Çöpler continues to operate uninterrupted. However, COVID-19 restrictions and the diversion of resources to manage the pandemic have delayed improvement initiatives which had an impact on operational performance. Proactively sending home older staff and those with existing health conditions also had an impact on mining operations through a shortfall of mine operators. This contributed to a decision in the first half of 2020 to adopt a revised mine plan to diversify ore sources.

 

Marigold: Year-To-Date Performance and 2020 Outlook

 

Gold production from Marigold was 108,366 ounces through June 30, 2020 at mine site AISC of $1,319 per ounce.

 

The 2020 Marigold production outlook is unchanged, with gold production expected to be 225,000 to 240,000 ounces. Mine site AISC are forecast to be $1,170 to $1,230 per ounce. Mine site AISC are higher than the original SSR Mining guidance mainly due to the impact of higher gold prices on royalty costs.

 

Sustaining capital expenditures are planned to total $55 million, which includes the construction of a new leach pad and the purchase of two new haul trucks. Capitalized stripping is expected to be $25 million for the full year due to stripping of upper portions of the next phase within the Mackay pit. The 2020 exploration spend is anticipated to be $16 million, focusing on expanding oxide Mineral Resources across the Marigold, Valmy, and Trenton Canyon properties, as well as discovery of higher-grade sulfides at Trenton Canyon. The Marigold exploration spend has increased from the original SSR Mining guidance due to the success of the exploration program through the first half of the year.

 

With respect to the COVID-19 pandemic, Marigold continues to operate uninterrupted. The mine continues to work with national and local authorities in accordance with applicable regulations and remains vigilant with respect to on-site specific protocols to protect the health and safety of our employees and stakeholders.

 

Seabee: Year-To-Date Performance and 2020 Outlook

 

Gold production from Seabee was 29,521 ounces through June 30, 2020 at mine site AISC of $982 per ounce.

 

In 2020, Seabee is expected to produce 80,000 to 90,000 ounces of gold at mine site AISC of $770 to $820 per ounce.

 

Sustaining capital expenditures are planned to total $15 million which includes mining equipment, underground infrastructure and tailings facility expansion. Investment in the tailings facility expansion is expected to be completed in 2021. Growth capital expenditures are planned to total $4 million, which includes phase two of the TSF expansion and development work to access the Santoy Gap Hanging Wall zone. Capitalized development is expected to be $10 million for the full year to support higher mining rates. The 2020 exploration spend is anticipated to be $9 million with a focus on expansion and definition of the Santoy Gap Hanging Wall and surface drill programs at the Seabee and Fisher properties following up on targets identified in 2019.

 

With respect to the COVID-19 pandemic, Seabee operations were suspended in March 2020 and limited underground development and ore mining operations re-commenced in June 2020. Ore extraction and development rates ramped up through July and milling operations at Seabee commenced in early August. Milling operations re-commenced with an ore stockpile providing mill operating flexibility relative to mine extraction. Mill throughput is anticipated to average over 1,200 tonnes per operating day for the balance of 2020. The restart sequencing and ongoing prioritization of activities at Seabee maintain the flight and camp operations within the determined health and safety protocols.

 

Puna: Year-To-Date Performance and 2020 Outlook

 

Silver production from Puna was 2.1 million ounces through June 30, 2020 at mine site AISC of $16.72 per ounce.

 

In 2020, Puna is expected to produce 4.9 to 5.3 million ounces of silver at mine site AISC of $15.00 to $17.00 per ounce.

 

Sustaining capital expenditures are planned to total $15 million, principally focused on maintenance of the mine, mill and power generating equipment. Growth capital expenditures are planned to total $6 million to replace contracted ore transportation as the operation focuses on lowering unit costs. Capitalized stripping is expected to be $7 million for the full year.

 

With respect to the COVID-19 pandemic, Puna operations were suspended in March 2020. Puna returned to production late in the second quarter with mining, hauling and milling all re-commencing operations. Travel protocols and restrictions within Argentina and the province of Jujuy remain in place and infection rates have escalated, causing impacts to operations. During the third quarter, Puna has had to reduce and suspend operations sporadically to manage camp occupancy, conduct testing and reduce transmission risk. Strict protocols remain in place to manage COVID risk within the camp and operation.

 

Pitarrilla

 

At the Pitarrilla project, located in Mexico, $5 million is expected to be spent in 2020 as part of a program to extend an existing decline to provide drill access to the underground Mineral Resources. An improved geological model from work completed in 2019 indicates strong potential to better define known, high-grade mineralized veining associated with steeply dipping rhyolite dyke contacts. Extending the underground ramp provides access for tighter spaced drilling at better orientations to test the rhyolite dykes and veins for continuity. If infill drilling confirms the continuity of high-grade mineralized structures, there would be potential to enhance the grades of existing Mineral Resources. The start of the decline development was delayed due to COVID-19 restrictions and is now anticipated to begin during the fourth quarter of 2020.

 

San Luis

 

At the San Luis project, located in Peru, $2 million is expected to be spent in 2020 to commence a detailed mapping program in the area of the existing high-grade gold-silver Mineral Reserves and Resources. Subject to the lifting of travel restrictions in Peru related to COVID-19, work is anticipated to begin during the fourth quarter of 2020.

 

Assumptions

 

All figures in U.S. dollars, unless otherwise noted. Gold equivalent figures for 2020 operating guidance are based on a gold-to-silver ratio of 74:1. Cash costs and capital expenditures guidance is based on an oil price of $40 per barrel and an exchange rate of 1.35 Canadian dollars to one U.S. dollar.

 

About SSR Mining

 

SSR Mining Inc. is a leading, free cash flow focused intermediate gold company with four producing assets located in the USA, Turkey, Canada, and Argentina, combined with a global pipeline of high-quality development and exploration assets in the USA, Turkey, Mexico, Peru, and Canada. In 2019, the four operating assets produced over 720,000 ounces of gold and 7.7 million ounces of silver. 

 

SSR Mining’s diversified asset portfolio is comprised of high margin, long-life assets along several of the world’s most prolific precious metal districts including the Çöpler mine along the Tethyan belt in Turkey; the Marigold mine along the Battle Mountain-Eureka trend in Nevada, USA; the Seabee mine along the Trans-Hudson Corridor in Saskatchewan, Canada; and  the Puna mine along the Bolivian silver belt in Jujuy, Argentina. SSR Mining has an experienced leadership team with a proven track record of value creation. Across SSR Mining, the team has expertise in project construction, mining (open pit and underground), and processing (pressure oxidation, heap leach, and flotation), with a strong commitment to health, safety and environmental management. 

 

SSR Mining intends to leverage its strong balance sheet and proven track record of free cash flow generation as foundations to organically fund growth across the portfolio and to facilitate superior returns to shareholders.

 

Posted September 18, 2020

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