SSR Mining(SSRM) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION First Quarter 2023 Highlights SSR Mining produced 146,894 gold equivalent ounces at $1,693 AISC, reporting $29.8 million net income and $561.8 million cash Q1 2023 Key Financial and Operating Metrics | Metric | Value | | :--- | :--- | | Gold Equivalent Production | 146,894 ounces | | All-in Sustaining Costs (AISC) | $1,693 per gold-equivalent ounce | | Attributable Net Income | $29.8 million | | Attributable EPS (diluted) | $0.14 per share | | Adjusted Attributable Net Income | $21.3 million | | Adjusted Attributable EPS (diluted) | $0.10 per share | | Operating Cash Flow | $3.0 million | | Free Cash Flow | $(56.3) million | | Cash and Cash Equivalents (as of Mar 31, 2023) | $561.8 million | - The company returned $19.6 million to shareholders in Q1 2023, comprising $14.4 million in dividends and $5.2 million in share repurchases[11] - Positive exploration results at the Puna operations in Argentina suggest potential extensions to the mine's Mineral Reserve life, with the first exploration drilling completed at the property since 2016[11] Financial Statements and Supplementary Data Unaudited Q1 2023 financial statements reflect decreased revenue and net income, stable assets, and reduced cash from investing and financing activities Condensed Consolidated Statements of Operations Q1 2023 revenue decreased to $314.6 million, with operating income falling to $37.0 million and net income attributable to shareholders at $29.8 million Q1 2023 vs Q1 2022 Statement of Operations (in thousands) | Account | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $314,614 | $355,446 | | Cost of sales | $199,297 | $153,520 | | Operating income | $36,985 | $115,870 | | Net income attributable to SSR Mining | $29,813 | $67,563 | | Diluted EPS | $0.14 | $0.31 | Condensed Consolidated Statements of Cash Flows Net cash from operations declined to $3.0 million in Q1 2023, with increased cash used in investing and financing activities, resulting in a $93.3 million net cash decrease Q1 2023 vs Q1 2022 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,967 | $62,187 | | Net cash used in investing activities | $(51,881) | $(27,885) | | Net cash used in financing activities | $(38,189) | $(53,449) | | Net (decrease) in cash, cash equivalents | $(93,294) | $(18,564) | Condensed Consolidated Balance Sheets As of March 31, 2023, total assets were $5.23 billion, with cash at $561.8 million, and total liabilities decreasing to $1.10 billion Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $561,783 | $655,453 | | Total current assets | $1,342,308 | $1,376,435 | | Total assets | $5,234,803 | $5,254,657 | | Total current liabilities | $250,962 | $279,252 | | Total liabilities | $1,096,992 | $1,128,458 | | Total equity | $4,137,811 | $4,126,199 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, segment changes to four mines, revenue breakdown, income tax impacts including a new Türkiye earthquake tax, and share repurchase activities - The company changed its reportable segments in Q1 2023 to four producing mines: Çöpler, Marigold, Seabee, and Puna. Previous exploration and development properties are now managed by the nearest reportable segment[35] Revenue by Metal (Q1 2023 vs Q1 2022, in thousands) | Metal | Q1 2023 Revenue | Q1 2022 Revenue | | :--- | :--- | :--- | | Gold | $239,861 | $295,617 | | Silver | $49,115 | $33,965 | | Lead | $12,776 | $13,857 | | Zinc | $4,457 | $6,310 | | Total | $314,614 | $355,446 | - The consolidated effective income tax rate was 8.8% for Q1 2023, down from 29.2% in Q1 2022, primarily due to foreign currency fluctuations and the release of uncertain tax positions, partially offset by a new Türkiye earthquake tax[47] - During Q1 2023, the company repurchased and cancelled 348,171 common shares for $5.2 million under its Normal Course Issuer Bid (NCIB) program[79] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2023 revenue decline to lower gold sales and higher costs, impacting profitability, while liquidity remains strong despite negative free cash flow from increased capital spending Consolidated Results of Operations Q1 2023 consolidated revenue decreased 11.5% to $314.6 million due to lower gold sales, while cost of sales rose 29.8%, leading to a 68.1% drop in operating income Consolidated Financial and Operating Results (Q1 2023 vs Q1 2022, in thousands) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $314,614k | $355,446k | (11.5)% | | Operating income | $36,985k | $115,870k | (68.1)% | | Net income attributable to SSR | $29,813k | $67,563k | (55.9)% | | Gold equivalent produced (oz) | 146,894 | 173,675 | (15.4)% | | AISC per gold equivalent oz sold | $1,693 | $1,093 | 54.9% | - The decrease in revenue was mainly due to 19.8% fewer ounces of gold sold, partially offset by a 1.2% increase in average realized gold prices and a 35.3% increase in silver ounces sold[92] - The increase in cost of sales was mainly due to higher operating costs and inflationary pressure[93] Results of Operations by Mine Q1 2023 mine performance varied, with Marigold and Puna increasing production, while Çöpler and Seabee saw significant declines due to lower grades, impacting site costs and profitability Çöpler, Türkiye - Q1 2023 Operating Data | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Gold produced (oz) | 55,074 | 70,641 | (22.0)% | | Cost of sales ($/oz) | $1,287 | $864 | 49.0% | | AISC ($/oz) | $1,420 | $955 | 48.7% | Marigold, USA - Q1 2023 Operating Data | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Gold produced (oz) | 51,979 | 33,788 | 53.8% | | Cost of sales ($/oz) | $1,063 | $1,048 | 1.4% | | AISC ($/oz) | $1,663 | $1,564 | 6.3% | Seabee, Canada - Q1 2023 Operating Data | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Gold produced (oz) | 15,768 | 52,582 | (70.0)% | | Cost of sales ($/oz) | $1,385 | $343 | 303.8% | | AISC ($/oz) | $2,207 | $596 | 270.3% | Puna, Argentina - Q1 2023 Operating Data | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Silver produced ('000 oz) | 2,015 | 1,303 | 54.6% | | Cost of sales ($/oz silver) | $19.67 | $20.34 | (3.3)% | | AISC ($/oz silver) | $16.40 | $14.67 | 11.8% | Liquidity and Capital Resources The company maintains strong liquidity with $561.8 million cash, despite a $93.7 million decrease from investing and financing activities, including $14.4 million in dividends and $5.2 million in share repurchases - Declared quarterly cash dividends of $0.07 per common share, totaling $14.4 million in Q1 2023[119] - Repurchased and cancelled 348,171 common shares for $5.2 million at an average price of $14.92 per share in Q1 2023[120] - Cash and cash equivalents decreased by $93.7 million from December 31, 2022, to $561.8 million at March 31, 2023[121] Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures, including Cash Costs, AISC, Adjusted Net Income, and Free Cash Flow, to provide insight into underlying operational performance - Cash Costs and AISC are used to monitor operating performance and reflect the ongoing cost of production. AISC includes cash costs plus sustaining capital, exploration, reclamation, and G&A expenses[130][131] - Adjusted Attributable Net Income excludes significant, non-recurring items like impairment adjustments, certain tax impacts, and transaction costs to measure underlying operating performance[140] - Free Cash Flow is calculated by deducting cash capital spending from cash generated by operating activities and is used to evaluate the company's ability to generate cash after capital investments[145] Reconciliation of Net Income to Adjusted Net Income (in thousands) | Description | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income attributable to SSR (GAAP) | $29,813 | $67,563 | | Adjustments (net) | $(8,539) | $(1,621) | | Adjusted net income (Non-GAAP) | $21,274 | $65,942 | Quantitative and Qualitative Disclosures About Market Risk No material changes in market risks occurred during Q1 2023, with further details available in the Annual Report on Form 10-K - There were no material changes in market risks during Q1 2023[153] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[154] - No material changes to internal control over financial reporting occurred during Q1 2023[155] PART II - OTHER INFORMATION Legal Proceedings The company is involved in legal proceedings from its normal course of business, which are not expected to have a material financial impact - The company is involved in legal proceedings from its normal course of business, which are not expected to have a material impact[83][157] Risk Factors This section refers to the detailed discussion of risk factors in the company's Annual Report on Form 10-K - For a detailed discussion of risk factors, the report refers to the Company's Annual Report on Form 10-K for the year ended December 31, 2022[158] Unregistered Sales of Equity Securities and Use of Proceeds Under its NCIB, the company is authorized to repurchase up to 10.6 million common shares, with 348,171 shares repurchased in Q1 2023, leaving 4,198,703 shares remaining Share Repurchase Activity (as of March 30, 2023) | Period | Shares Purchased in Period | Average Price Paid | Total Shares Purchased (Program-to-Date) | Remaining Authorization | | :--- | :--- | :--- | :--- | :--- | | Jan 2023 | 0 | - | 6,053,126 | 4,546,874 | | Feb 2023 | 0 | - | 6,053,126 | 4,546,874 | | Mar 2023 | 348,171 | $14.92 | 6,401,297 | 4,198,703 | - The Normal Course Issuer Bid (NCIB) commenced on June 20, 2022, authorizing the purchase of up to 10,600,000 common shares through June 19, 2023[159] Mine Safety Disclosures Mine safety violations and other regulatory information, as required by the Dodd-Frank Act, are included in Exhibit 95 - Required mine safety information is included in Exhibit 95 to this Quarterly Report[165]