SSR Mining(SSRM) - 2024 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION FORWARD-LOOKING STATEMENTS This section cautions that forward-looking statements are subject to risks and uncertainties, advising readers not to place undue reliance on them - Forward-looking statements are identified by words such as "may," "will," "could," "should," "expect," "plan," "anticipate," "believe," "intend," "estimate," "projects," "predict," "potential," "continue" and similar expressions[10] - Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the Company's forward-looking statements[10] - Readers are cautioned not to place undue reliance on forward-looking statements due to inherent uncertainties[10] ÇÖPLER INCIDENT AND FIRST QUARTER 2024 SUMMARY Çöpler mine operations suspended due to a heap leach pad slip, leading to significant remediation costs and a Q1 2024 net loss - Operations at Çöpler were suspended on February 13, 2024, due to a significant slip on the heap leach pad[16] - The remediation plan, to be submitted in Q2 2024, includes constructing a permanent storage facility for 18 to 20 million tonnes of displaced material[18] - The remediation work is expected to cost between $250.0 million to $300.0 million (100% basis), in addition to approximately $25.0 million incurred to-date, and will be implemented over 24 to 36 months[18] - The heap leach pad will be permanently closed, and the company cannot estimate when operations will resume at Çöpler[19] Q1 2024 Financial and Operating Summary (in millions USD) | Metric | Q1 2024 | Q1 2023 | | :-------------------------------------- | :------ | :------ | | Attributable Net Loss | $(287.1) | $29.8 | | Adjusted Attributable Net Income | $22.5 | $21.3 | | Diluted EPS | $(1.42) | $0.14 | | Operating Cash Flow | $24.6 | $3.0 | | Free Cash Flow | $(9.4) | $(56.3) | | Gold Equivalent Production (ounces) | 101,873 | 146,894 | | Cash & Cash Equivalents (as of March 31, 2024) | $467.0 | $561.8 | | Available Borrowings | $399.1 | N/A | ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section presents unaudited condensed consolidated financial statements and notes, detailing the Çöpler Incident's financial impact Condensed Consolidated Statements of Operations (unaudited) Operations statements show a shift from net income to a substantial net loss in Q1 2024, driven by Çöpler Incident costs Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023, in thousands) | Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Revenue | $230,234 | $314,614 | (26.8)% | | Cost of sales | $125,901 | $199,297 | (36.8)% | | Reclamation and remediation costs | $275,318 | $2,173 | 12,569.9% | | Impairment charges | $114,230 | $— | 100.0% | | Operating income (loss) | $(376,424) | $36,985 | (1,117.8)% | | Net income (loss) attributable to SSR Mining shareholders | $(287,082) | $29,813 | (1,062.9)% | | Basic Net income (loss) per share | $(1.42) | $0.14 | (1,114.3)% | | Diluted Net income (loss) per share | $(1.42) | $0.14 | (1,114.3)% | Condensed Consolidated Statements of Cash Flows (unaudited) Cash flow statements show a net decrease in cash for Q1 2024, primarily from investing and financing activities Condensed Consolidated Statements of Cash Flows (Q1 2024 vs Q1 2023, in thousands) | Metric | Q1 2024 | Q1 2023 | | :-------------------------------------- | :------ | :------ | | Net cash provided by operating activities | $24,631 | $2,967 | | Net cash used in investing activities | $(36,778) | $(51,881) | | Net cash used in financing activities | $(10,820) | $(38,189) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(25,382) | $(93,294) | | Cash, cash equivalents, and restricted cash end of period | $467,112 | $595,812 | Condensed Consolidated Balance Sheets (unaudited) Balance sheets show decreased assets and equity, with increased liabilities due to reclamation and remediation costs Condensed Consolidated Balance Sheets (March 31, 2024 vs December 31, 2023, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------- | :---------------- | | Total current assets | $1,081,870 | $1,196,476 | | Total assets | $5,251,782 | $5,385,773 | | Total current liabilities | $352,768 | $170,573 | | Reclamation and remediation liabilities (current) | $185,797 | $3,364 | | Total liabilities | $1,312,954 | $1,081,570 | | Total equity | $3,938,828 | $4,304,203 | Condensed Consolidated Statements of Changes in Equity (unaudited) Equity statements show a decrease in total equity due to net loss and share repurchases, partially offset by compensation Condensed Consolidated Statements of Changes in Equity (March 31, 2024 vs December 31, 2023, in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------- | :---------------- | | Balance as of December 31, 2023 (start of period) | $3,373,080 | $3,579,737 | | Repurchase of common shares | $(9,825) | $(5,197) | | Equity-settled stock-based compensation | $2,612 | $2,037 | | Net income (loss) | $(287,082) | $29,813 | | Balance as of March 31, 2024 (end of period) | $3,078,785 | $3,592,158 | Notes to Condensed Consolidated Financial Statements (unaudited) Notes detail accounting policies, Çöpler Incident financial impacts, segment performance, revenue, tax, and fair value measurements - SSR Mining operates four producing assets in the United States, Türkiye, Canada, and Argentina, producing gold doré, copper, silver, lead, and zinc concentrates[41] - The company accrued approximately $250.0 million for estimated future reclamation and remediation costs related to the Çöpler Incident[55] - Non-cash impairment charges of $76.0 million for leach pad inventory and $38.2 million for mineral properties, plant and equipment were recorded due to the Çöpler Incident[58] Revenue by Product (Q1 2024 vs Q1 2023, in thousands) | Product | Q1 2024 | Q1 2023 | | :---------------- | :------- | :------- | | Gold doré sales | $183,990 | $239,861 | | Concentrate sales | $48,372 | $66,348 | | Other | $(2,128) | $8,405 | | Total | $230,234 | $314,614 | - The consolidated effective income tax rate was 5.4% for Q1 2024, down from 8.8% in Q1 2023, primarily due to foreign currency fluctuations and a decline in operating income[72] - As of March 31, 2024, there were no unrecognized tax benefits, inclusive of interest and penalties, due to Türkiye's Tax Amnesty legislation in 2023[76][77] - As of March 31, 2024, the company had $399.1 million of borrowing capacity available under its revolving credit facility with no outstanding borrowings[107] - The company repurchased 1,117,100 common shares for $9.8 million in Q1 2024 prior to the Çöpler Incident, then terminated its automatic share purchase plan effective March 1, 2024[110][108] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses Q1 2024 financial condition and operations, highlighting the Çöpler Incident's impact on performance and liquidity Business Overview SSR Mining operates four precious metals properties in the US, Türkiye, Canada, and Argentina, producing various concentrates - SSR Mining operates four producing properties located in the United States, Türkiye, Canada, and Argentina[120] - The company is primarily engaged in the operation, acquisition, exploration, and development of precious metal resource properties[120] - Products include gold doré as well as copper, silver, lead, and zinc concentrates[120] Consolidated Results of Operations Q1 2024 consolidated results show a substantial net loss due to the Çöpler Incident, with increased costs and decreased production Consolidated Financial Results (Q1 2024 vs Q1 2023, in thousands) | Financial Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Revenue | $230,234 | $314,614 | (26.8)% | | Cost of sales | $125,901 | $199,297 | (36.8)% | | Reclamation and remediation costs | $275,318 | $2,173 | 12,569.9% | | Impairment charges | $114,230 | $— | 100.0% | | Operating income (loss) | $(376,424) | $36,985 | (1,117.8)% | | Net income (loss) attributable to SSR Mining shareholders | $(287,082) | $29,813 | (1,062.9)% | | Basic net income (loss) per share | $(1.42) | $0.14 | (1,114.3)% | | Adjusted attributable net income (loss) | $22,510 | $21,274 | 5.8% | | Adjusted basic attributable net income (loss) per share | $0.11 | $0.10 | 10.0% | Consolidated Operating Results (Q1 2024 vs Q1 2023) | Operating Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Gold produced (oz) | 80,280 | 122,821 | (34.6)% | | Gold sold (oz) | 89,279 | 126,111 | (29.2)% | | Silver produced ('000 oz) | 1,915 | 2,015 | (5.0)% | | Silver sold ('000 oz) | 1,659 | 2,382 | (30.4)% | | Gold equivalent produced (oz) | 101,873 | 146,894 | (30.6)% | | Gold equivalent sold (oz) | 107,983 | 154,557 | (30.1)% | | Average realized gold price ($/oz sold) | $2,061 | $1,902 | 8.4% | | Average realized silver price ($/oz sold) | $22.18 | $23.38 | (5.1)% | | AISC per gold equivalent ounce sold | $1,569 | $1,693 | (7.3)% | - Revenue decreased by $84.4 million (26.8%) primarily due to 29.2% fewer gold ounces sold, partially offset by an 8.4% higher average realized gold price[126] - Cost of sales decreased by $73.4 million (36.8%) mainly due to 29.2% fewer gold ounces sold, primarily related to the suspension of operations at Çöpler[127] - Reclamation and remediation costs increased by $273.1 million due to $22.5 million of remediation costs incurred and approximately $250.0 million in accrued liabilities related to the Çöpler Incident[131] - Impairment charges of $114.2 million were recorded due to non-cash impairment of heap leach pad inventory and related facilities at Çöpler[133] Results of Operations This section details the Q1 2024 operational and financial performance of each mine, highlighting the Çöpler Incident's impact Çöpler, Türkiye Çöpler operations suspended due to the incident, resulting in decreased gold production and sales, and increased AISC Çöpler Operating Data (Q1 2024 vs Q1 2023) | Operating Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Gold produced (oz) | 21,827 | 55,074 | (60.4)% | | Gold sold (oz) | 23,960 | 58,014 | (58.7)% | | Average realized gold price ($/oz sold) | $2,013 | $1,890 | 6.5% | | Cost of sales ($/oz gold sold) | $1,019 | $1,287 | (20.8)% | | AISC ($/oz gold sold) | $1,573 | $1,420 | 10.8% | - Operations at Çöpler were suspended on February 13, 2024, following the Çöpler Incident[140][142] - Care and maintenance expense of $14.4 million was recorded during the suspension, comprising $7.7 million in direct costs and $6.7 million in depreciation[132][142] Marigold, USA Marigold saw decreased gold production and sales due to lower-grade ore, increasing costs, but AISC decreased from lower capital spending Marigold Operating Data (Q1 2024 vs Q1 2023) | Operating Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Gold produced (oz) | 34,680 | 51,979 | (33.3)% | | Gold sold (oz) | 36,869 | 51,297 | (28.1)% | | Average realized gold price ($/oz sold) | $2,074 | $1,913 | 8.4% | | Gold grade stacked (g/t) | 0.13 | 0.42 | (68.3)% | | Cost of sales ($/oz gold sold) | $1,331 | $1,063 | 25.2% | | Cash costs ($/oz gold sold) | $1,333 | $1,066 | 25.0% | | AISC ($/oz gold sold) | $1,430 | $1,663 | (14.0)% | - Gold production decreased 33.3% due to lower grade ore stacked[145] - Cost of sales per ounce of gold sold and cash costs per ounce of gold sold increased 25.2% and 25.0%, respectively, due to lower grade ore stacked and a higher strip ratio[145] - AISC per ounce of gold sold decreased 14.0% as a result of lower sustaining capital expenditures[145] Seabee, Canada Seabee showed strong Q1 2024 performance with increased gold production and sales from higher mill feed grade, reducing costs Seabee Operating Data (Q1 2024 vs Q1 2023) | Operating Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Gold produced (oz) | 23,773 | 15,768 | 50.8% | | Gold sold (oz) | 28,450 | 16,800 | 69.3% | | Average realized gold price ($/oz sold) | $2,070 | $1,910 | 8.4% | | Gold mill feed grade (g/t) | 6.51 | 4.60 | 41.6% | | Cost of sales ($/oz gold sold) | $859 | $1,385 | (38.0)% | | Cash costs ($/oz gold sold) | $859 | $1,386 | (38.0)% | | AISC ($/oz gold sold) | $1,416 | $2,207 | (35.8)% | - Gold production increased 50.8% due to higher mill feed grade[147] - Revenue increased by $27.0 million (84.2%) due to more gold ounces sold and a higher average realized gold price[147] - Cost of sales per ounce of gold sold, cash costs per ounce of gold sold, and AISC per ounce of gold sold decreased significantly (38.0%, 38.0%, and 35.8% respectively) due to higher grade ore milled[147] Puna, Argentina Puna saw decreased silver production and sales due to lower-grade ore and delays, but reduced costs from lower fuel and duties Puna Operating Data (Q1 2024 vs Q1 2023) | Operating Metric | Q1 2024 | Q1 2023 | Change (%) | | :-------------------------------------- | :------ | :------ | :--------- | | Silver produced ('000 oz) | 1,915 | 2,015 | (5.0)% | | Silver sold ('000 oz) | 1,659 | 2,382 | (30.4)% | | Lead produced ('000 lb) | 9,998 | 11,361 | (12.0)% | | Zinc produced ('000 lb) | 1,217 | 2,480 | (50.9)% | | Average realized silver price ($/oz) | $22.18 | $23.38 | (5.1)% | | Silver mill feed grade (g/t) | 148.51 | 157.35 | (5.6)% | | Cost of sales ($/oz silver sold) | $16.87 | $19.67 | (14.3)% | | Cash costs ($/oz silver sold) | $12.29 | $14.41 | (14.7)% | | AISC ($/oz silver sold) | $15.61 | $16.40 | (4.8)% | - Silver production decreased 5.0% due to lower grade ore milled[150] - Silver sold decreased 30.4% due to the timing of sales attributable to transportation delays[150] - Cost of sales decreased by $18.9 million (40.3%) due to lower fuel costs, freight charges, and export duties[150] Liquidity and Capital Resources The company maintains strong liquidity with cash and credit, sufficient for operations and Çöpler remediation, despite suspended dividends - As of March 31, 2024, the company had $467.0 million of cash and cash equivalents[155] - The company had $399.1 million of borrowing capacity available under its revolving credit facility and no outstanding borrowings as of March 31, 2024[24][107] - The Board of Directors has suspended dividends following the Çöpler Incident, with no estimated resumption date[160] - The company terminated its automatic share purchase plan effective March 1, 2024, following the Çöpler Incident, and does not know when share repurchases may resume[162] Cash Flow Activity (Q1 2024 vs Q1 2023, in thousands) | Metric | Q1 2024 | Q1 2023 | | :-------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $24,631 | $2,967 | | Cash used in investing activities | $(36,778) | $(51,881) | | Cash used in financing activities | $(10,820) | $(38,189) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(25,382) | $(93,294) | - Cash provided by operating activities increased mainly due to a favorable working capital change and an 8.4% higher average realized gold price in 2024, offset by a 29.2% decrease in gold ounces sold[165] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures used to evaluate operating performance, not as GAAP substitutes - Cash Costs and All-In Sustaining Costs (AISC) per payable ounce are non-U.S. GAAP metrics developed by the World Gold Council to provide transparency and a standard for comparison across the industry[171] - Adjusted attributable net income (loss) and adjusted attributable net income (loss) per share are used to measure the Company's underlying operating performance, excluding the after-tax impact of specific significant, non-recurring items[182] - EBITDA and Adjusted EBITDA are indicators of the Company's ability to generate liquidity, with Adjusted EBITDA excluding the impact of specific significant, non-recurring items like impairment charges[185][186] - Free cash flow is calculated by deducting cash capital spending from cash generated by operating activities, used to evaluate cash flow after capital investments[189] Critical Accounting Estimates This section refers to the Annual Report on Form 10-K for critical accounting estimates, noting no material changes - No material changes in the Company's critical accounting estimates since December 31, 2023; refer to the Annual Report on Form 10-K for detailed information[191] New Accounting Pronouncements This section refers to Note 2 for new accounting pronouncements, including SEC and FASB rules on disclosures - Refer to Note 2 of the Condensed Consolidated Financial Statements for a discussion of recently issued accounting pronouncements[192] - Recently issued pronouncements include SEC's Final Rule 33-11275 on climate-related disclosures (effective FY2025, currently stayed) and FASB's ASU 2023-09 on income tax disclosures (effective FY2025) and ASU 2023-07 on segment reporting disclosures (effective FY2024)[47][48][49] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No material changes in market risks occurred in Q1 2024; refer to the Annual Report on Form 10-K for more information - No material changes in market risks occurred during the three-month period ended March 31, 2024[194] - For additional information on market risks, refer to the Annual Report on Form 10-K for the year ended December 31, 2023[194] ITEM 4. CONTROLS AND PROCEDURES Disclosure controls were effective as of March 31, 2024, with internal control modifications due to a new ERP system - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[195] - A new enterprise resource planning (ERP) system, SAP, was implemented as of January 1, 2024, resulting in modifications to certain internal controls over financial reporting[196] - Other than the ERP system implementation, there were no other material changes in the Company's internal control over financial reporting during Q1 2024[196] PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Following the Çöpler Incident, the company faces six securities class actions alleging misrepresentations, with no liability recorded - Six putative securities class actions (two in the US, four in Canada) have been filed against the company and its management following the Çöpler Incident[199][200] - The lawsuits allege violations of securities laws and misrepresentations concerning the adequacy of the company's internal controls related to safety practices and operational integrity at the Çöpler mining facility[199][200] - No liability has been recorded for these lawsuits as of March 31, 2024, because the company believes any such liability is not probable and reasonably estimable at this time[117][201] ITEM 1A. RISK FACTORS This section directs readers to the Annual Report on Form 10-K for risk factors, noting potential impact from unknown risks - Readers should carefully consider the factors discussed in Part I, Item IA, "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023[202] - Additional risks and uncertainties not currently known or deemed immaterial may also materially adversely affect the business, financial condition, cash flows, and/or future results[202] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The company terminated its share repurchase plan (NCIB) effective March 1, 2024, following the Çöpler Incident, with no resumption timeline - The 2023 Normal Course Issuer Bid (NCIB) authorized the repurchase of up to 10,200,000 common shares by June 19, 2024[203] - Following the Çöpler Incident, the company terminated its automatic share purchase plan effective March 1, 2024, and ceased all share repurchases under the 2023 NCIB[204] - The company does not know at this time when it may resume share repurchases[204] Common Shares Purchased (Q1 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------- | :------------------------------- | :--------------------------- | | January 1 - January 31 | 553,300 | $10.16 | | February 1 - February 29 | 563,800 | $7.04 | | March 1 - March 31 | - | - | ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults on senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[207] ITEM 4. MINE SAFETY DISCLOSURES Mine safety information is included in Exhibit 95 of this report, as mandated by relevant regulations - Mine safety information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report[208] ITEM 5. OTHER INFORMATION Several directors and officers terminated their Rule 10b5-1 trading arrangements in early 2024 following the Çöpler Incident - Rod Antal, Executive Chairman, terminated his Rule 10b5-1 trading arrangement on March 18, 2024, following the Çöpler Incident[210] - Michael Sparks, Executive Vice President, Chief Legal and Administrative Officer, terminated his Rule 10b5-1 trading arrangement on February 20, 2024, following the Çöpler Incident[211] - F. Edward Farid, Executive Vice President, Chief Corporate Development Officer, terminated his Rule 10b5-1 trading arrangement on February 20, 2024, following the Çöpler Incident[212] ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES This section lists exhibits filed with Form 10-Q, including agreements, certifications, and XBRL data files - The exhibits include separation agreements, employment agreement amendments, CEO/CFO certifications, mine safety information, and XBRL instance, schema, calculation, definition, labels, and presentation files[214] SIGNATURES The report was signed on May 8, 2024, by the Executive Vice President, CFO, and Vice President, Controller - The report was signed on May 8, 2024[216] - Signatories include Michael J. Sparks, Executive Vice President and Chief Financial Officer, and Russell Farnsworth, Vice President, Controller[216]