SSR Mining Inc.

Hello, everyone, and welcome to SSR Mining's first quarter 2024 financial results conference call. Please be advised that this call is being recorded. Should anyone need assistance during the conference call, they may signal an operator by pressing star, then zero. At this time, I would like to, for opening remarks, I would like to turn the call over to Alex Huncheck from SSR Mining. Please go ahead.

Thank you, operator, and hello, everyone. Thank you for joining today's conference call, during which we'll provide an update on the Topler incident, as well as a brief review of our first quarter financial results. Our consolidated financial statements have been presented in accordance with U.S. GAF. These financial statements have been filed on EDGAR, CDAR, the ASX, and are also available on our website. To accompany our call, there is an online webcast, and you will find the information to access the webcast in our news release related to this call. 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 and the relevant documents. Additionally, we will 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 Antle, Executive Chairman, will lead today's call, and members of our executive team, including Michael Sparks, Chief Financial Officer, Eddie Farid, Chief Strategy Officer, and Bill McNevin, EVP Operations Sustainability, are also present on the call. I will now turn the line over to Rod. Great. Thanks, Alex.

I'm going to speak first about CHIRPLA and provide all our stakeholders with an update on both our immediate priorities and on our path forward in Turkey. I will then provide an update on our ongoing operations in the Americas. The current priorities for CHRPLA can be distilled into four clear categories. One, the recovery efforts for our five remaining colleagues. Two, the containment efforts. Three, the remediation plan. And four, planning for next steps. So first, with respect to the recovery efforts. I would like to start by offering our sincere condolences to the families of our missing colleagues as well as the community members who are impacted by the Chirpler incident. The primary focus at Chirpler has and continues to be the return of the remaining missing colleagues to their families. Our teams in consultation with the relevant Turkish authorities have been diligently working on finding the missing individuals and will continue to do so. All recovery activities are currently focused in the Suburly Valley. To date, over 6.7 million tonnes of heap leach material has been relocated as part of the ongoing recovery, containment and remediation activity, including the removal of 4.2 million tonnes from the Suburli Valley. Second, the containment efforts. Since the incident, our containment efforts have advanced alongside the removal of the displaced material. This work includes activities such as the installation of a grout curtain, copper dam and buttress which are substantially complete. There is also the ongoing installation of pumping systems and diversion channels. We currently expect the removal of all the displaced heat bleach material from the Suburli Valley and into temporary storage locations to be completed in the third quarter of 2024. Third, the permanent remediation planning. While our teams on the ground have advanced the recovery and containment work, we have also worked with the Turkish Government independent experts and external consultants to develop a remediation plan. This plan includes, among other things, permanent closure of the heap leach pad and construction of a long-term storage facility for the displaced heap leach material. This facility will be designed to permanently store the approximately 18 to 20 million tonnes of displaced material. The future remediation work is expected to cost between $250 to $300 million on a 100% basis. This is in addition to the approximately $25 million already spent since the incident in February. We expect work to be completed over a two to three year period. With the company's total cash position at $467 million at the end of the first quarter, cash flow from our three ongoing operations and no balance outstanding on our revolving credit facility, we are well positioned to fund this remediation work in the future. This transitions us to the initial plans for the next steps. In order to restart the operations, the company will require the reinstatement of the previously suspended environmental impact assessment and operating permits. At this time, it remains too early to provide guidance of if and when the mine will restart. But for future planning purposes, we anticipate the sulphide plant will initially process the more than 700,000 ounces of gold from the sulphide stockpiles while remediation work is completed. Then let's move on to slide five, and discuss the 2024 operating results. First quarter 2024 production was 102,000 gold equivalent ounces at an all in sustaining cost of $1,569 per ounce, including 80,000 gold equivalent ounces from Marigold, CB and Puna. The results from these three operations were in line with our expectations for a back half weighted production profile and each asset remains well on track for the full year production and cost guidance. As a reminder, Marigold's 2024 production profile remains 70% weighted to the second half of the year, while Puna's production is 55% weighted to half too. Accordingly, we expect the second quarter to be our highest cost at lowest production period of the year. However, over 2024, we expect the three operations will deliver solid asset free cash flow. On the development side, while the scope of the planned activities for 2024 at Hop Madden have been reduced, we have continued to advance engineering and project execution planning and the technical studies. We will provide additional updates at a later date. Moving on to slide six and a brief look at the financial results. We recorded an attributable net loss of $1.42 per share in the first quarter, reflecting the financial impacts of the Chirpler incident, which we will discuss shortly. Adjusted net income per share was 11 cents, and we generated $25 million in operating cash flow in the quarter. Free cash flow was a negative $9 million. As noted, our total cash position is $467 million with an additional undrawn revolving credit facility available. We continue to have a solid liquidity position to manage remediation costs at Chirpler and reinvestment needs across the business going forward. Moving on to slide seven and shed some more colour on the non-cash and cash impacts of the Chirpler incident. As I mentioned, our first quarter of financial results were significantly impacted by the Chirpler incident. We recorded charges totaling $288 million including costs incurred to date plus future remediation costs and legal contingencies. These reclamation and remediation work will include the construction of the east storage facility, displaced heap leach material movement, heap leach pad remediation and all containment infrastructure. In addition, we recorded an impairment of $76 million for all heap leach inventory, which contained an estimated 44,000 ounces of recoverable gold. and an impairment of $38 million for the now obsolete heat bleach equipment and infrastructure, given the heat bleach pad facility will be permanently closed. On to slide nine, a discussion on the operating results beginning with Marigold. Marigold's first quarter production of 35,000 ounces was in line with our expectations. The 2024 mine plan called for the first quarter to feature the lowest quarterly stacked oil grades, reflecting the focus on waste stripping at Red Dot in the first half of this year. Despite this, the all-in sustaining costs of $1,430 per ounce were better than expected, largely due to the timing of the capital spent. Quarter two all-in sustaining costs are expected to be above four-year guidance as a result of the deferral the capital spend from quarter one. Marigold remains well on track for its full year production and cost guidance. Moving on to CB on slide number 10. At CB the first quarter production was 24,000 ounces and an all in sustaining cost of $1,416 per ounce. Production and costs were slightly better than planned reflecting the processing of higher grade material stockpiled in the fourth quarter of 2023. The remainder of the year, CB expects mine and process grades to average between five and six grams per tonne. CB remains on track for its full year production and cost guidance as well. The exploration activities at CB continues to focus on near mine extensions, to existing underground mineralisation as well as continued advancements of Pawki and the Pawki West targets. The Pawki targets represent a potential mine life extension opportunity and the CB team is aggressively advancing the technical studies to better delineate this opportunity. Finally, let's move on to Pooner on slide 11. Pooner produced 1.9 million ounces of silver in the first quarter. slightly lower than expected due to a significant rainfall that impacted the mining rates. Despite this, PETA remains well on track for full year production guidance of 8.75 to 9.5 million ounces of silver at an oil and sustaining cost of $14.75 to $16.25 per ounce. Exploration and technical work continues to evaluate opportunities to extend operations of Puna through potential extensions of Chinchillas and the continued advancement of the Corte de Aristarga through near-vine drilling. Our team at CHIRPLA remains focused and steadfast as we continue with the overall recovery efforts. This has been supported by the strong operating results of Marigold, Seabee and Puna And I want to recognise our team's focus and commitment during a difficult time. Before I open up for questions, I would like to remind folks there are certain topics around legal matters and ongoing investigations that I cannot comment on at this time. So Operator, if we can open up the call now to any questions people might have. Thank you.

Thank you, Mr Antal. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. The first question comes from Always Habib with Scotiabank. Please go ahead.

Hi, Rod and SSR team. Just a couple of questions from me. Just regarding the remediation costs at Chopler of 250 to 300 million, does this amount include any sort of care and maintenance cost throughout the two to three years that's going to take you to complete the remediation?

No, it doesn't, Obayas. It takes into account the construction of the storage facility. the remediation efforts on the heat bleach pad, etc. If you look at the financials, the care and maintenance costs in the first quarter are around, I think, $17 million per memory. And so I think if you allow for those per quarter going forward... And I think it would also depend on, obviously, how long that goes for while we're shut down.

Okay, thanks for that, Rod. And just in regards to the environmental permits, so will you look to apply for the environmental permits while the remediation is ongoing or once the remediation is complete? Essentially, I mean, is there a possibility that the sulphide plant could start before the remediations are complete?

Yeah, like I think as I sort of mentioned and will keep saying, you know, our efforts and focus has really been on finding our missing colleagues and the work to define what the remediation efforts will be and getting those in consultation with the government authorities approved. We've only really just started to turn our mind to a start-up and all the other factors that go with it which will require us to get that EIA permit reinstated and some other things as well. So it's a little bit early to say exactly what pathway we need and how long it's going to take and all those other questions I know you all have, but that will come over time.

Okay, maybe I'll jump back into the queue and let some other guys come in, but thanks for taking my initial questions.

Thanks, Abbas.

The next question comes from Mike Parkin with National Bank. Please go ahead.

Thanks, guys. First on CB, historically you've always had a big working capital outflow in the first quarter with the inventory bill that CB on the ice road. I couldn't find any mention of that in the 10Q. Is that something that has happened? Did you get everything to site that you were hoping for?

Firstly, Mike, welcome back.

Thank you.

Hope you're doing well. We actually had a very successful winter program this year on the ice road. Probably our best one for many years. So we didn't have the normal sort of build-ups that we've had before, where we've had some delays on the ice roads to get the logistics up and down the... up and down the road itself. So it was a slightly different outcome this year, a much more efficient, better outcome in terms of that build up and efficiency in that working capital.

Okay, that's good. And then on Sherpa, are you like, can you give us, I know you can't speak on everything, but in terms of who you're dialoguing with, you know, where you are in the process, is there still like an investigation being carried out by, I don't even know what ministry, if it's like Ministry of Labour, Ministry of Environment, are those concluded and you're awaiting their ruling on that? Or like, where are you in the process on that front?

Yeah, look, again, Mike, I think you'd appreciate, I can't comment specifically on the ongoing investigations and the legal proceedings. But, you know, on the ground, we have... I think we mentioned it last quarter when the incident happened. We have many government stakeholders actually at Sherpa from the various different ministries that we would normally interact in on mining, you know, normal mining activities, as well as other ministries... that have been a great assistance on the ground for us. And so those conversations have been going on since day one, and discussing everything, as I've mentioned, on Ovaeus's questions, you know, around the remediation efforts, around how we're going to look at the long-term storage solutions for the displaced heap leach material, how we remedy the heap leach pad, and close that as well, et cetera, et cetera. So all that dialogue has been ongoing at the various ministry levels at all levels within those ministries, and that will continue.

Okay. And then just one follow-up on the remediation work that you're estimating will cost $250 million to $300 million. Are those plans concrete and approved by the government, or is Is that a work in progress?

It's based on the discussions in engineering design that we have done to date. So those estimates are based on a lot of work, a lot of detailed work at this stage. So yes, it's well advanced in terms of the engineering.

Okay. And then just over back over the ocean to Marigold. You know barracks regularly commenting of an extremely tight labor market in Nevada, but then others that we talked to note that it's not doesn't seem to be as bad. What's your experience with Marigold? Are you finding turnover rates are elevated or more in line with historical norms? Or are you benefiting from possibly gaining workers from other states.

Mike, I'm going to pass that one over to Bill to answer.

Good afternoon, Mike. We do a lot of work with our workforce, both obviously focusing on where we're going as a business, but also on the development of the people and their part in that. In terms of the turnover in general, we're really just at our historic levels. If anything, we're doing a lot of work to improve off that. So no real impact to the business, and we're looking to leverage on reducing it even further.

Great. Thanks very much, Rod. Thanks. It's good to be back.

Good. Thanks, Mark.

The next question comes from Kerry McCrury with Canaccord Genuity. Please go ahead.

Hi. Good afternoon, guys. I'm just wondering if you are able to restart the plant with stockpiles only. Do you have a sense of what the cash cost of that would be?

Look, Kerry, that detail will come down the track. Once we have clarity about the pathways, dates, et cetera, et cetera, we'll reset those planning efforts around that. But it's just too early to talk about those things just yet.

Fair enough. And just on the convertible debt, on the investors have the right to redeem potentially in 2026 or have the company repurchase, is there anything related to the incident in Turkey that could trigger that in 2026 or is that related to something else?

I'm going to pause at 180. Not at this stage.

Any detail around that or not really?

Oh, look, if you go through the contracts of the convertible notes, at this stage, there's nothing around the incident that gives us concern regarding the convertible notes. Okay.

Thank you.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Antal.

Okay. Thanks, Operator. And, again, I appreciate everyone joining us today. and look forward to continuing with the updates as we move along, particularly at Sherpa. Good evening to you all.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.