Earnings call: SSR Mining addresses COPLER incident and financials

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Earnings call: SSR Mining addresses COPLER incident and financials
Credit: © Reuters.

In a recent earnings call, SSR Mining ( NASDAQ : NASDAQ: SSRM ) provided an update on the COPLER incident and reviewed the company’s fourth quarter and full year financial results for 2023. Executive Chairman Rodney Antal expressed deep sympathies for the families of the nine personnel missing following a significant slip from the heap leach pad at COPLER, which occurred on February 13, 2023.

The company, which has suspended operations at COPLER, is focusing on recovery efforts and working with Turkish authorities to address the situation. Despite the incident, SSR Mining reported a strong liquidity position at the end of 2023, with $492 million in cash and no near-term debt maturities. However, the COPLER incident is expected to impact financial results in 2024, leading to the suspension of the company’s quarterly dividend and automated share purchase plan.

Key Takeaways

  • SSR Mining has suspended operations at COPLER following a significant slip from the heap leach pad.
  • The company expressed condolences for the nine missing personnel and is prioritizing search and rescue efforts.
  • A containment strategy is being implemented for the affected area, with environmental monitoring by Turkish authorities indicating no contamination so far.
  • SSR Mining ended 2023 with $492 million in cash and no near-term debt maturities.
  • The company has suspended its quarterly dividend and automated share purchase plan due to the COPLER incident.
  • Operations at other SSR Mining sites—Marigold, Seabee, and Puna—are continuing.

Company Outlook

  • SSR Mining is working closely with government officials and regulators to address the COPLER incident and will update the market as new information arises.
  • The company is evaluating the financial impact of the COPLER incident for 2024 and anticipates impairment charges related to the heap leach inventory.

Bearish Highlights

  • The COPLER incident has led to the suspension of operations and could result in significant financial impacts for SSR Mining.
  • The company has suspended its dividend and share purchase plan to preserve cash.
  • Investments at unspecified projects have been temporarily put on hold.

Bullish Highlights

  • SSR Mining's other operations continue to generate cash flow.
  • The company ended the year with a strong liquidity position, which could help navigate the current challenges.

Misses

  • There is uncertainty regarding the full financial impact of the COPLER incident.
  • Due to the incident, the COPLER AIA (presumably an authorization or permit) has been revoked.

Q&A Highlights

  • The company has notified its insurers of the COPLER slip and is working with them as investigations continue.
  • Costs and logistics of moving the slipped material are still uncertain, with priority given to recovery efforts and stabilization of the heap leach pad.
  • Potential impairment charges for Q1 2024 are anticipated, with $73 million referenced as making up 19% of COPLER's total gold inventory.

SSR Mining's earnings call focused on addressing the tragic COPLER incident and its implications for the company's operations and financial outlook. While the immediate priority is the recovery of the missing personnel and ensuring the safety and environmental integrity of the site, SSR Mining is also assessing the financial repercussions and taking steps to preserve its cash position. The company's other mining operations continue to operate and contribute to its liquidity, providing some stability amidst the uncertainty caused by the COPLER incident.

InvestingPro Insights

In light of the recent developments at SSR Mining (NASDAQ: SSRM), investors are closely monitoring the company's financial health and future prospects. According to the latest data from InvestingPro, SSRM has a market capitalization of $862.5 million. This valuation comes at a time when the company has reported significant revenue growth over the last twelve months as of Q4 2023, with a 24.29% increase to $1.426 billion USD. Moreover, SSRM's gross profit margin stands at a robust 43.64%, showcasing the company's ability to maintain profitability despite the operational setbacks.

InvestingPro Tips suggest that SSR Mining's management has been proactively responding to market conditions by aggressively buying back shares. This could signal confidence in the company's value proposition and long-term strategy. Moreover, SSRM is noted for holding more cash than debt on its balance sheet, which is particularly reassuring for investors considering the liquidity challenges following the COPLER incident.

Additionally, the company's Price / Book ratio as of the last twelve months of Q4 2023 was reported at 0.26, indicating that the stock may be trading at a low valuation relative to its book value. This could be an attractive entry point for value investors, especially when combined with the fact that SSRM pays a significant dividend to shareholders, with a yield of 6.57% as of the latest available data.

Investors seeking to delve deeper into SSR Mining's financials and strategic positioning can find a wealth of additional InvestingPro Tips at https://www.investing.com/pro/SSRM. With a total of 17 tips available, these insights can help investors make more informed decisions. Moreover, users can take advantage of an exclusive offer by using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, further enhancing their investment research capabilities.

Full transcript - Silver standard resources (SSRM) Q4 2023:

Operator: Hello, everyone, and welcome to SSR Mining's Fourth Quarter and Full Year 2023 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Alex Hunchak from SSR Mining. Please go ahead.

Alex Hunchak: Thank you, operator, and hello, everyone. Thank you for joining today's conference call, during which we'll provide an update on the COPLER incident as well as a brief review of our fourth quarter and full year financial results. Our 2023 consolidated financial statements have been presented in accordance with U.S. GAAP. These financial statements have been filed on EDGAR, SEDAR, the ASX and are also available on our website. To accompany our call, there is an online webcast. You will find the information to access the webcast in our news release relating 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 in 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 measure. Rod Antal, Executive Chairman, will lead today's call. I will now turn the line over to Rod for his opening remarks.

Rodney Antal: Thank you, Alex. I'm going to speak to the ongoing situation at COPLER. Firstly, I want to pass on our deepest sympathies and condolences to the families, friends, colleagues and communities of the nine personnel who remain missing. It is an incredibly difficult time for everyone who has been impacted by the incident, and we are still processing this tragic loss and will be for some time. In a sign of respect, I would like to take a moment of silence. Thank you. I'm sure you can appreciate that the situation at COPLER is dynamic. And while I will provide some detail today, there are many more questions you may have that I'm not able to answer at this time. I would appreciate your understanding during the Q&A. The focus of the discussion today will be on the incident itself, in the activities and priorities of COPLER at this time. So let's walk through the facts as they currently stand. At approximately 6:30 a.m. Eastern Time on the 13th of February, a significant slip occurred from the heap leach pad With an estimated 18 million to 20 million tonnes sliding into Sabirli Valley and the Manganese Pit. Full operations at COPLER were immediately suspended. It was confirmed that nine personnel were unaccounted for once the confirmatory headcounts were completed in the hours following the incident. Immediate efforts were focused on safely conducting search and rescue. Various government agencies were immediately deployed to COPLER, including the search and rescue teams. Since then, we have been supporting the activities at the site under the direction of the various government agencies. I would like to recognize and thank the Turkish authorities for their rapid response and overwhelming support to the [ site ]. Rather than repeat all the details contained in the press releases that are available on our website, let me summarize the current situation and focus at COPLER. The immediate focus was on the search and rescue efforts. This was initially suspended due to the instability of the heap leach pad, but efforts to locate the personnel have since resumed. Our priority is to safely recover and return our people to their families. In addition, efforts have been focused on three other areas. First, to agree on and initiate a plan to stabilize the heap leach pad allowing work to safely continue on the recovery of our missing people. Initial work began on February 23 to stabilized portion of the heap leach pad, and extensive monitoring is taking place using drones and radar. The work to determine the final overall plan and approach to stabilize the pad, including the use of remote equipment, is continuing to advance. Second priority has been on the containment of the Sabirli Creek area. In this regard, a containment pond was immediately constructed and the installation of a concrete curtain at the bottom of the valley is underway. Order diversion systems at the top of the Sabirli valley are also underway. The Turkish government is conducting environmental monitoring of surface water, ground water, soil and air quality in the region. Couple of comments from the Turkish government today indicate that test results have been negative with respect to potential contamination in the locations being monitored. These results are preliminary and additional testing will continue. Finally, and number three is the ongoing discussion with the various government ministries to determine the permanent storage location for the heap leach material. Moving on to just a few other facts. As a result of the incident for COPLER AIA has been revoked. Six personnel are being detained and are facing charges in relation to the incident and we're ensuring they receive the necessary support while respecting the Turkish legal process. Investigations led by the Turkish government are underway to determine the cause of factors leading to the slip. We expect this to take some time to complete and until then, have no further comments to make. As we look ahead, we continue to work closely with government officials and regulators, and we'll update the market as facts present themselves moving forward. With respect to our financial results. Given a lot of the information was pre-released with the technical reports on the 13th of February, I intend only to highlight a couple of key points. First, the business ended 2023 with a strong liquidity position with total cash of $492 million, no near-term debt maturities and continued cash flow generation from our three other operations. Looking forward, the COPLER incident will have an impact on our financial results in 2024. We continue to evaluate and assess these potential impacts as laid out in today's 10-K filings. In the first quarter of '24 and as noted in the 10-K, we anticipate recording an impairment at the heap leach inventory directly impacted by the COPLER incident and will also evaluate the COPLER long-lived asset group for any additional impairment. Given the uncertainty surrounding these items, we are taking some steps to preserve our cash position until we have more fidelity around the forward-looking cash requirements of the business. As a result, we have suspended our quarterly dividend and automated share purchase plan we put in place last year. Given our focus is on Turkiye, is on COPLER, we've also temporarily placed further investment at [indiscernible] on hold at this time. We will revisit the time line and approach in due course. This has obviously been a very difficult time for everyone impacted by the events of February 13, and we are doing everything we can to support our colleagues and the various stakeholders on the ground in Turkiye. Clearly, we are in a period of some uncertainly, and there is no doubt that we have some challenges ahead as we focus on the recovery efforts at COPLER. In the meantime, operations are continuing at Marigold, Seabee and Puna. As I turn the line back to the operator for any questions, I will again note that we'll keep the discussions on the incident to my prepared remarks. That said, we will do our utmost to answer questions related to the 2023 operating and financial results of the other properties. So operator, please go ahead with questions.

Operator: [Operator Instructions] The first question comes from Don DeMarco with National Bank Financial.

Don DeMarco: First of all, my condolences to everyone with the company and in particular, the missing personnel and their families and colleagues. Now Rod, I don't want to overstep what your intentions were for this call. But maybe if you could just clarify, did you want no questions on the COPLER incident? Or am I able to ask a few questions to get additional color on some of the points that you made?

Rodney Antal: Yes, Don, you can ask questions. Just be respectful to the fact that the incident is only two weeks old. And clearly, we're focused on those areas that I mentioned in the call, but I'll do my best to answer anything else.

Don DeMarco: Is there any chance that the slip -- could you talk about your insurance? Is it that the potential that the slip might be insured?

Rodney Antal: As normal course, we have notified our insurers of the slip and we'll continue to work with them in the ordinary course as the final investigations and facts come to hand. But at this stage, they're being notified.

Don DeMarco: Okay. And so as you described, there's -- one of the big efforts right now is in containing the extent of the contamination is a big earthworks process underway. Do you have any sense about the cost per tonne to move the material? And is the material accessible? Or is there parts where some of the slipped heap might be difficult to reach given steep slopes and other factors?

Rodney Antal: Yes. At this stage, Don, there's really no fidelity around the numbers. I'll just tell you what the areas of focus are for us is, we continue to work actively on the heap leach pad stabilization. That's really the key priority so we can continue with those efforts to recover the missing people to return to their families. The containment area around the Sabirli Valley and particularly is well advanced, as I mentioned, and will continue until we finished that work. And then really, the last piece around the discussions with the various governmental authorities around the final area for the material to be placed is really on just -- haven't really just gone underway. So too early to put any more color on that.

Don DeMarco: Okay. Fair enough. And then maybe just as a final question. In the release this afternoon, it mentioned that there's a potential impairment charge in Q1 and it stated $73 million, and it referenced that, that makes up of the 19% of COPLER total gold inventory. I just want to clarify, does that represent 19% of the heap leach gold inventory or the total heap leach and sulfide gold inventory?

Rodney Antal: It is the total of both the oxides and sulphides, Don. It's all the [ imagery ] at COPLER and the amount that we're referring to is the sites.

Operator: This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Antal for any closing remarks. Please go ahead.

Rodney Antal: Great. Thank you, operator. And again, thank you all for joining us, and goodbye for now.

Operator: This concludes the conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

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