SSR Mining(SSRM) - 2022 Q4 - Annual Report

Part I 2022 Highlights SSR Mining produced 623,819 gold equivalent ounces at $1,339/oz AISC, reported $194.1 million net income, and returned $158.8 million to shareholders - 2022 Key Financial and Operational Metrics | Metric | Value | | :--- | :--- | | Production | 623,819 gold equivalent ounces | | All-in Sustaining Costs (AISC) | $1,339 per gold equivalent ounce | | Attributable Net Income | $194.1 million | | Attributable Net Income per Diluted Share | $0.89 | | Operating Cash Flow | $160.9 million | | Free Cash Flow | $23.4 million | | Capital Returned to Shareholders | $158.8 million (4.9% yield) | - The company strengthened its balance sheet, ending 2022 with $655.5 million in cash and cash equivalents after significant capital returns, debt repayments, and strategic M&A transactions[17] - Strategic portfolio adjustments in 2022 included the acquisition of Taiga Gold Corp., the sale of the Pitarrilla project, and an increased ownership in the Kartaltepe Mining Joint Venture to 80%[17] Business SSR Mining operates four precious metals assets in Türkiye, USA, Canada, and Argentina, primarily producing gold doré, facing competitive and regulatory challenges Introduction - SSR Mining operates four producing assets in the USA, Türkiye, Canada, and Argentina, focusing on the production of gold doré, silver, lead, and zinc concentrates[18] - The company maintains a strong balance sheet with over $655.5 million in cash and cash equivalents as of December 31, 2022, which it intends to use for funding growth and providing shareholder returns[20] Segment Information Revenue Contribution by Operating Segment (2022) | Operating Segment | Location | 2022 Revenue Contribution | | :--- | :--- | :--- | | Çöpler Gold Mine | Türkiye | 31% | | Marigold Mine | United States | 30% | | Seabee Gold Operations | Canada | 21% | | Puna Operations | Argentina | 18% | Principal Products Revenue by Product Category | Product | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Gold | 82% | 84% | 88% | | Silver | 14% | 12% | 11% | | Lead | 3% | 2% | 1% | | Zinc | 1% | 2% | —% | - In 2022, sales of gold doré accounted for 82% of revenue, with major customers being the Central Bank of Türkiye (31%), CIBC (28%), and Bank of Montreal (16%)[25] - The average LBMA gold price in 2022 was $1,800/oz, a slight increase from 2021, while the average silver price was $21.73/oz, a 14% decrease from 2021[31] Environmental, Social and Governance (ESG) - The company's ESG approach focuses on minimizing environmental impact and creating a positive community legacy, guided by its Environmental & Sustainability Policy and overseen by the Board's EHS&S Committee[40][41][43] - SSR Mining plans to establish an action plan to achieve net zero emissions by 2050, acknowledging the transition to a lower-carbon economy may increase operational costs[45] - In June 2022, operations at the Çöpler mine were temporarily suspended by Türkiye's Ministry of Environment due to a diluted cyanide leak; operations restarted on September 22, 2022, after remediation initiatives were completed[38] Human Capital Management - As of December 31, 2022, the company employed approximately 2,500 full-time employees and 2,050 contract employees, with significant union representation in Türkiye (64%) and Argentina (60%)[54] - The company is committed to diversity and inclusion, achieving over 30% female representation on its Board of Directors in 2022, and is a member of the Catalyst Accord 2022 and the 30% Club Canada[55] - SSR Mining has adopted a Human Rights Policy aligned with international principles, including the UN Guiding Principles on Business and Human Rights[60] Risk Factors The company faces significant operational, financial, industry, and jurisdictional risks, including metal price volatility, supply chain, currency, and political instability Risks Related to the Company's Operations and Business - The company's profitability is highly dependent on the volatile market prices of gold, silver, and other metals, which are affected by numerous factors beyond its control, such as global consumption patterns, central bank policies, and inflation[74][75] - Estimates of mineral reserves and resources are inherently uncertain and depend on geological interpretation and assumptions; actual production may yield less mineral than estimated, which could adversely affect economic viability and financial results[88][91] - Operations are subject to supply chain disruptions, rising energy prices, and the availability of sufficient water, any of which could interrupt production, increase costs, and negatively impact financial performance[94][97][99] Financial Risks and Risks Related to Our Indebtedness - The company is exposed to foreign exchange risk as revenues are in USD while some costs are in Turkish Lira, Canadian dollars, and Argentine pesos; appreciation of these currencies against the USD increases operating costs[133] - High inflation in countries like Argentina (94.8% in 2022) and Türkiye (72% in 2022) can significantly increase operational costs in local currencies, potentially making projects or mines uneconomic[135] - The company's debt of approximately $298.3 million as of December 31, 2022, requires sufficient cash generation for service; failure to meet obligations or financial covenants, as occurred temporarily in Q3 2022 with the Term Loan due to the Çöpler suspension, could lead to liquidity problems[146][152] Risks Related to Our Industry and the Jurisdictions in Which We Operate - The company is exposed to political and economic instability in the countries where it operates (USA, Türkiye, Canada, Argentina), including risks of tax increases, expropriation, foreign exchange controls, and uncertain regulatory environments[153] - Mining is inherently risky, subject to events like geological problems, equipment failures, environmental hazards, and industrial accidents; the June 2022 cyanide leak at Çöpler, which led to a temporary operational suspension, exemplifies this risk[159][160] - Maintaining a social license to operate requires meeting increasing stakeholder expectations for community benefits and environmental stewardship; failure to do so can result in operational disruptions, increased costs, and reputational damage, as seen with community and activist responses to the Çöpler incident[164] Risks Related to Governmental Regulation and Legal Proceedings - The company's operations are subject to extensive governmental regulations covering health, safety, and environmental protection; failure to comply can result in substantial penalties, sanctions, or suspension of permits[176] - Obtaining and renewing necessary permits is a complex and time-consuming process; delays, failures to obtain permits, or challenges from community groups can adversely affect operations and development projects[181][182] - Compliance with emerging climate change regulations could result in significant costs; the company also faces physical risks from climate change, such as extreme weather events, which could disrupt operations, particularly at remote sites like Seabee[192][194] Properties SSR Mining's portfolio includes four producing assets in Türkiye, USA, Canada, and Argentina, with 7.62 million ounces of attributable proven and probable gold reserves Çöpler Gold Mine, Erzincan Province, Türkiye - Çöpler is an open-pit gold mine in Türkiye, 80% owned by SSR Mining; it processes both oxide and sulfide ores through separate heap leach and pressure oxidation (POX) circuits, respectively[216][220][233] Çöpler Attributable Mineral Reserves (as of Dec 31, 2022) | Category | Tonnes (kt) | Gold Grade (g/t) | Contained Gold (koz) | | :--- | :--- | :--- | :--- | | Proven | 7,166 | 2.56 | 590 | | Probable | 51,129 | 2.05 | 3,393 | | Proven & Probable | 58,300 | 2.12 | 3,983 | Çöpler Life of Mine (LOM) Cost Estimates | Cost Category | Total LOM ($M) | LOM Average ($/t) | | :--- | :--- | :--- | | Capital Costs | $449.3 | - | | Operating Costs | $3,175 | $43.81 | Marigold Mine, Nevada, United States - Marigold is a 100% owned open-pit, run-of-mine heap leach operation located in Nevada, USA; it has been in continuous operation for over 30 years[311][319] Marigold Mineral Reserves (as of Dec 31, 2022) | Category | Tonnes (kt) | Gold Grade (g/t) | Contained Gold (koz) | | :--- | :--- | :--- | :--- | | Proven | — | — | — | | Probable (in-pit) | 185,703 | 0.48 | 2,842 | | Probable (leach pad) | — | — | 314 | | Total Probable | 185,703 | - | 3,156 | Marigold Life of Mine (LOM) Cost Estimates | Cost Category | Total LOM ($M) | LOM Average ($/t) | | :--- | :--- | :--- | | Capital Costs | $299.0 | - | | Operating Costs | $1,855 | $10.16 | Seabee Gold Operation, Saskatchewan, Canada - Seabee is a 100% owned remote underground gold mine in Saskatchewan, Canada; ore is produced from the Santoy mine and processed at the Seabee mill, which uses gravity concentration and cyanidation[358][361] Seabee Mineral Reserves (as of Dec 31, 2022) | Category | Tonnes (kt) | Gold Grade (g/t) | Contained Gold (koz) | | :--- | :--- | :--- | :--- | | Proven | 86 | 7.71 | 21 | | Probable | 2,259 | 6.34 | 460 | | Proven & Probable | 2,345 | 6.38 | 481 | Seabee Life of Mine (LOM) Cost Estimates | Cost Category | Total LOM ($M) | LOM Average ($/t Milled) | | :--- | :--- | :--- | | Capital Costs | $116.7 | - | | Operating Costs | $349 | $154.03 | Puna Operations, Jujuy Province, Argentina - Puna is a 100% owned open-pit silver-lead-zinc mine in Argentina; ore from the Chinchillas mine is transported 45 km to the Pirquitas processing plant to produce silver-lead and zinc concentrates[400][404] Puna Mineral Reserves (as of Dec 31, 2022) | Metal | Category | Tonnes (kt) | Grade | Contained Metal | | :--- | :--- | :--- | :--- | :--- | | Silver | Proven & Probable | 6,623 | 156 g/t | 33,122 koz | | Lead | Proven & Probable | 6,623 | 1.30% | 189.6 Mlbs | | Zinc | Proven & Probable | 6,623 | 0.25% | 37.1 Mlbs | Puna Life of Mine (LOM) Cost Estimates | Cost Category | Total LOM ($M) | LOM Average ($/t milled) | | :--- | :--- | :--- | | Capital Costs | $31.6 | - | | Operating Costs | $288 | $50.45 | Operating Statistics 2022 Production by Mine | Mine | Gold Produced (oz) | Silver Produced ('000 oz) | Lead Produced ('000 lb) | Zinc Produced ('000 lb) | | :--- | :--- | :--- | :--- | :--- | | Çöpler | 191,366 | — | — | — | | Marigold | 194,668 | — | — | — | | Seabee | 136,125 | — | — | — | | Puna | — | 8,397 | 41,004 | 8,583 | 2021 Production by Mine | Mine | Gold Produced (oz) | Silver Produced ('000 oz) | Lead Produced ('000 lb) | Zinc Produced ('000 lb) | | :--- | :--- | :--- | :--- | :--- | | Çöpler | 329,276 | — | — | — | | Marigold | 235,282 | — | — | — | | Seabee | 118,888 | — | — | — | | Puna | — | 8,010 | 37,695 | 13,642 | Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities SSR Mining's shares trade on TSX/Nasdaq; in 2022, the company repurchased 6.05 million shares for $100.0 million and paid $0.28 per share in dividends - Under its 2022 Normal Course Issuer Bid (NCIB), the company repurchased 6,053,126 common shares for approximately $100.0 million at a weighted average price of $16.53 per share[591] - The company paid cash dividends of $0.28 per common share in 2022, totaling $58.8 million; the quarterly dividend was increased from $0.05 to $0.07 per share in February 2022[596] Management's Discussion and Analysis of Financial Condition and Results of Operations In 2022, revenue decreased 22.1% to $1.15 billion and net income fell 50.6% to $210.4 million, primarily due to operational disruptions Consolidated Results of Operations Consolidated Financial Results (Years Ended December 31) | Metric (in thousands, except per share) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1,148,033 | $1,474,199 | (22.1)% | | Operating income | $190,268 | $444,375 | (57.2)% | | Net income | $210,428 | $425,922 | (50.6)% | | Attributable net income | $194,140 | $368,076 | (47.3)% | | Diluted net income per share | $0.89 | $1.63 | (45.4)% | | Adjusted diluted attributable net income per share | $0.67 | $1.78 | (62.4)% | Consolidated Operating Results (Years Ended December 31) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Gold equivalent produced (oz) | 623,819 | 794,456 | (21.5)% | | Gold equivalent sold (oz) | 617,135 | 797,602 | (22.6)% | | Cost of sales per AuEq oz sold | $985 | $842 | 17.0% | | AISC per AuEq oz sold | $1,339 | $955 | 40.2% | - The 22.1% decrease in 2022 revenue was primarily driven by a 22.6% decrease in gold equivalent ounces sold, mainly due to the temporary suspension of operations at Çöpler and slower leaching at Marigold[627] Liquidity and Capital Resources - Cash and cash equivalents decreased by $362.1 million during 2022, from $1,017.6 million to $655.5 million, primarily due to cash used in investing and financing activities[677] Summary of Cash Flows (Years Ended December 31, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $160,896 | $608,986 | | Cash used in investing activities | ($236,282) | ($129,137) | | Cash used in financing activities | ($271,782) | ($319,769) | - In 2022, the company returned capital to shareholders through $58.8 million in dividends and $100.0 million in share repurchases[672][674] Non-GAAP Financial Measures - The company uses non-GAAP measures such as Cash Costs, AISC, Adjusted Attributable Net Income, EBITDA, and Free Cash Flow to evaluate operating performance and provide additional information to investors[687] Reconciliation of Net Income to Adjusted Net Income (in thousands) | Line Item | 2022 | 2021 | | :--- | :--- | :--- | | Net income attributable to SSR Mining shareholders (GAAP) | $194,140 | $368,076 | | Adjustments (net) | ($49,326) | $33,681 | | Adjusted net income attributable to SSR Mining shareholders (Non-GAAP) | $144,814 | $401,757 | Reconciliation of Cash from Operations to Free Cash Flow (in thousands) | Line Item | 2022 | 2021 | | :--- | :--- | :--- | | Cash provided by operating activities (GAAP) | $160,896 | $608,986 | | Less: Additions to mineral properties, plant and equipment | ($137,515) | ($164,810) | | Free cash flow (non-GAAP) | $23,381 | $444,176 | Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from commodity price, currency (TRY, CAD, ARS), and interest rate fluctuations, with a 10% silver price change impacting net income by $6.6 million - Price Risk: A 10% change in the silver price as of December 31, 2022, would result in a $6.6 million change in after-tax net income due to provisional concentrate sales[739] - Currency Risk: The company faces significant exposure to fluctuations in the Turkish Lira (TRY), Canadian Dollar (CAD), and Argentine Peso (ARS); the economies of Argentina and Türkiye are considered highly inflationary, with 2022 inflation rates reaching 94.8% and 72% respectively[740][742] - Interest Rate Risk: A 1.0% change in the LIBOR interest rate would impact the company's after-tax net income by $0.8 million due to its variable-rate Term Loan[749] Financial Statements and Supplementary Data This section presents the audited 2022 consolidated financial statements, including operations, cash flows, balance sheets, and equity, with an unqualified audit opinion Notes to Consolidated Financial Statements - Acquisition of Kartaltepe: On November 17, 2022, the company acquired an additional 30% of Kartaltepe for $150.0 million, increasing its ownership to 80% and resulting in consolidation; a gain of $81.9 million was recognized on the transaction[863][864] - Debt: As of December 31, 2022, total debt was $298.3 million, consisting primarily of $226.5 million in 2.50% Convertible Senior Notes due 2039 and a $70.0 million Term Loan; the company was in compliance with all debt covenants at year-end after receiving a waiver for a temporary non-compliance event in Q3 2022 related to the Çöpler suspension[979][988] - Share Repurchases: During 2022, the company repurchased and cancelled 6.1 million common shares for $100.0 million under its Normal Course Issuer Bid (NCIB)[929] Part III Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees Information on directors, executive officers, corporate governance, compensation, and accountant fees is incorporated by reference from the 2023 Proxy Statement - Detailed information regarding directors, executive compensation, security ownership, and accountant fees is not included in this 10-K but is incorporated by reference from the company's forthcoming Proxy Statement[1019][1020][1021][1022][1023] Part IV Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Annual Report, including financial statements, expert consents, and various certifications - This section contains a comprehensive list of all exhibits filed with the Form 10-K, including material agreements, corporate articles, compensation plans, and required certifications under the Sarbanes-Oxley Act[1025][1027][1028]